Correlation Between Freedom Holding and SCOR PK
Can any of the company-specific risk be diversified away by investing in both Freedom Holding and SCOR PK 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 SCOR PK 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 SCOR PK, you can compare the effects of market volatilities on Freedom Holding and SCOR PK 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 SCOR PK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and SCOR PK.
Diversification Opportunities for Freedom Holding and SCOR PK
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freedom and SCOR is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and SCOR PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR PK 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 SCOR PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR PK has no effect on the direction of Freedom Holding i.e., Freedom Holding and SCOR PK go up and down completely randomly.
Pair Corralation between Freedom Holding and SCOR PK
Given the investment horizon of 90 days Freedom Holding is expected to generate 2.18 times less return on investment than SCOR PK. But when comparing it to its historical volatility, Freedom Holding Corp is 1.52 times less risky than SCOR PK. It trades about 0.14 of its potential returns per unit of risk. SCOR PK is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 221.00 in SCOR PK on August 27, 2024 and sell it today you would earn a total of 29.00 from holding SCOR PK or generate 13.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Freedom Holding Corp vs. SCOR PK
Performance |
| Timeline |
| Freedom Holding Corp |
| SCOR PK |
Freedom Holding and SCOR PK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Holding and SCOR PK
The main advantage of trading using opposite Freedom Holding and SCOR PK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding position performs unexpectedly, SCOR PK 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 SCOR PK will offset losses from the drop in SCOR PK'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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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