Correlation Between Freedom Holding and Park Electrochemical
Can any of the company-specific risk be diversified away by investing in both Freedom Holding and Park Electrochemical 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 Park Electrochemical 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 Park Electrochemical, you can compare the effects of market volatilities on Freedom Holding and Park Electrochemical 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 Park Electrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Park Electrochemical.
Diversification Opportunities for Freedom Holding and Park Electrochemical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Freedom and Park is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Park Electrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park Electrochemical 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 Park Electrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park Electrochemical has no effect on the direction of Freedom Holding i.e., Freedom Holding and Park Electrochemical go up and down completely randomly.
Pair Corralation between Freedom Holding and Park Electrochemical
Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 1.0 times more return on investment than Park Electrochemical. However, Freedom Holding Corp is 1.0 times less risky than Park Electrochemical. It trades about 0.22 of its potential returns per unit of risk. Park Electrochemical is currently generating about 0.1 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. Park Electrochemical
Performance |
| Timeline |
| Freedom Holding Corp |
| Park Electrochemical |
Freedom Holding and Park Electrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and Park Electrochemical
The main advantage of trading using opposite Freedom Holding and Park Electrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding position performs unexpectedly, Park Electrochemical 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 Park Electrochemical will offset losses from the drop in Park Electrochemical's long position.| Freedom Holding vs. SCOR PK | Freedom Holding vs. Aquagold International | Freedom Holding vs. Small Cap Core | Freedom Holding vs. Morningstar Unconstrained Allocation |
| Park Electrochemical vs. Small Cap Core | Park Electrochemical vs. Freedom Holding Corp | Park Electrochemical vs. Gfl Environmental Holdings | Park Electrochemical vs. Growth Fund Of |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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