Correlation Between GobiMin and Freedom Holdings
Can any of the company-specific risk be diversified away by investing in both GobiMin 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 GobiMin and Freedom Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GobiMin and Freedom Holdings, you can compare the effects of market volatilities on GobiMin 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 GobiMin with a short position of Freedom Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GobiMin and Freedom Holdings.
Diversification Opportunities for GobiMin and Freedom Holdings
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GobiMin and Freedom is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding GobiMin and Freedom Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holdings and GobiMin 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 GobiMin 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 GobiMin i.e., GobiMin and Freedom Holdings go up and down completely randomly.
Pair Corralation between GobiMin and Freedom Holdings
Assuming the 90 days horizon GobiMin is expected to generate 256.6 times less return on investment than Freedom Holdings. But when comparing it to its historical volatility, GobiMin is 183.0 times less risky than Freedom Holdings. It trades about 0.08 of its potential returns per unit of risk. Freedom Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.10 in Freedom Holdings on September 3, 2024 and sell it today you would earn a total of 13.90 from holding Freedom Holdings or generate 1263.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 12.12% |
| Values | Daily Returns |
GobiMin vs. Freedom Holdings
Performance |
| Timeline |
| GobiMin |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Freedom Holdings |
GobiMin and Freedom Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GobiMin and Freedom Holdings
The main advantage of trading using opposite GobiMin and Freedom Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GobiMin 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.| GobiMin vs. Proficient Auto Logistics, | GobiMin vs. Hafnia Limited | GobiMin vs. Alvotech | GobiMin vs. Omni Health |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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