Correlation Between Spring Valley and Freedom Holding
Can any of the company-specific risk be diversified away by investing in both Spring Valley and Freedom Holding 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 Spring Valley and Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spring Valley Acquisition and Freedom Holding Corp, you can compare the effects of market volatilities on Spring Valley and Freedom Holding 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 Spring Valley with a short position of Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spring Valley and Freedom Holding.
Diversification Opportunities for Spring Valley and Freedom Holding
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Spring and Freedom is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition and Freedom Holding Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Holding Corp and Spring Valley 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 Spring Valley Acquisition are associated (or correlated) with Freedom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Holding Corp has no effect on the direction of Spring Valley i.e., Spring Valley and Freedom Holding go up and down completely randomly.
Pair Corralation between Spring Valley and Freedom Holding
Given the investment horizon of 90 days Spring Valley Acquisition is expected to under-perform the Freedom Holding. But the stock apears to be less risky and, when comparing its historical volatility, Spring Valley Acquisition is 2.48 times less risky than Freedom Holding. The stock trades about -0.07 of its potential returns per unit of risk. The Freedom Holding Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 11,138 in Freedom Holding Corp on August 26, 2024 and sell it today you would earn a total of 609.00 from holding Freedom Holding Corp or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spring Valley Acquisition vs. Freedom Holding Corp
Performance |
| Timeline |
| Spring Valley Acquisition |
| Freedom Holding Corp |
Spring Valley and Freedom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spring Valley and Freedom Holding
The main advantage of trading using opposite Spring Valley and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley position performs unexpectedly, Freedom Holding 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 Holding will offset losses from the drop in Freedom Holding's long position.The idea behind Spring Valley Acquisition and Freedom Holding Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |