Correlation Between Freedom Holding and Dover
Can any of the company-specific risk be diversified away by investing in both Freedom Holding and Dover at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Freedom Holding and Dover into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Holding Corp and Dover, you can compare the effects of market volatilities on Freedom Holding and Dover and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Freedom Holding with a short position of Dover. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Dover.
Diversification Opportunities for Freedom Holding and Dover
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Freedom and Dover is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Dover in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dover and Freedom Holding is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Freedom Holding Corp are associated (or correlated) with Dover. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dover has no effect on the direction of Freedom Holding i.e., Freedom Holding and Dover go up and down completely randomly.
Pair Corralation between Freedom Holding and Dover
Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 1.23 times more return on investment than Dover. However, Freedom Holding is 1.23 times more volatile than Dover. It trades about 0.22 of its potential returns per unit of risk. Dover is currently generating about 0.14 per unit of risk. If you would invest 10,577 in Freedom Holding Corp on August 24, 2024 and sell it today you would earn a total of 1,153 from holding Freedom Holding Corp or generate 10.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. Dover
Performance |
| Timeline |
| Freedom Holding Corp |
| Dover |
Freedom Holding and Dover Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and Dover
The main advantage of trading using opposite Freedom Holding and Dover positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding position performs unexpectedly, Dover can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dover will offset losses from the drop in Dover's long position.| Freedom Holding vs. Nomura Holdings ADR | Freedom Holding vs. Scully Royalty | Freedom Holding vs. Oppenheimer Holdings | Freedom Holding vs. Houlihan Lokey |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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