Correlation Between Golden Agri-Resources and Freedom Holdings
Can any of the company-specific risk be diversified away by investing in both Golden Agri-Resources and Freedom Holdings 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 Golden Agri-Resources and Freedom Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Golden Agri Resources and Freedom Holdings, you can compare the effects of market volatilities on Golden Agri-Resources and Freedom Holdings 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 Golden Agri-Resources with a short position of Freedom Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Agri-Resources and Freedom Holdings.
Diversification Opportunities for Golden Agri-Resources and Freedom Holdings
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Golden and Freedom is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Golden Agri Resources and Freedom Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holdings and Golden Agri-Resources 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 Golden Agri Resources are associated (or correlated) with Freedom Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holdings has no effect on the direction of Golden Agri-Resources i.e., Golden Agri-Resources and Freedom Holdings go up and down completely randomly.
Pair Corralation between Golden Agri-Resources and Freedom Holdings
Assuming the 90 days horizon Golden Agri Resources is expected to under-perform the Freedom Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Golden Agri Resources is 5.02 times less risky than Freedom Holdings. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Freedom Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Freedom Holdings on December 1, 2024 and sell it today you would earn a total of 13.00 from holding Freedom Holdings or generate 92.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Golden Agri Resources vs. Freedom Holdings
Performance |
| Timeline |
| Golden Agri Resources |
| Freedom Holdings |
Golden Agri-Resources and Freedom Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Golden Agri-Resources and Freedom Holdings
The main advantage of trading using opposite Golden Agri-Resources and Freedom Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Golden Agri-Resources position performs unexpectedly, Freedom Holdings 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 Freedom Holdings will offset losses from the drop in Freedom Holdings' long position.| Golden Agri-Resources vs. Wilmar International | Golden Agri-Resources vs. SLC Agricola SA | Golden Agri-Resources vs. Brasilagro Adr | Golden Agri-Resources vs. Alico Inc |
| Freedom Holdings vs. RTL Group SA | Freedom Holdings vs. ITV plc | Freedom Holdings vs. ITV PLC ADR | Freedom Holdings vs. iHeartMedia |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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