Correlation Between China VTV and Freedom Holding

Can any of the company-specific risk be diversified away by investing in both China VTV 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 China VTV and Freedom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China VTV and Freedom Holding Corp, you can compare the effects of market volatilities on China VTV 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 China VTV with a short position of Freedom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of China VTV and Freedom Holding.

Diversification Opportunities for China VTV and Freedom Holding

0.0

Correlation Coefficient

China VTV  Freedom Holding

Pay attention - limited upside

The 3 months correlation between China and Freedom is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China VTV 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 China VTV 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 China VTV 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 China VTV i.e., China VTV and Freedom Holding go up and down completely randomly.

Pair Corralation between China VTV and Freedom Holding

If you would invest  9,476  in Freedom Holding Corp on September 28, 2024 and sell it today you would earn a total of  3,768  from holding Freedom Holding Corp or generate 39.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China VTV  vs.  Freedom Holding Corp

China VTV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China VTV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, China VTV is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Freedom Holding Corp

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China VTV and Freedom Holding

The main advantage of trading using opposite China VTV and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China VTV 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 China VTV 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.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.