Correlation Between Fidus Investment and Freedom Holding

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

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

Diversification Opportunities for Fidus Investment and Freedom Holding

0.9

Correlation Coefficient

Fidus Investment  Freedom Holding

Almost no diversification

The 3 months correlation between Fidus and Freedom is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Fidus Investment Corp 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 Fidus Investment 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 Fidus Investment Corp 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 Fidus Investment i.e., Fidus Investment and Freedom Holding go up and down completely randomly.

Pair Corralation between Fidus Investment and Freedom Holding

Given the investment horizon of 90 days Fidus Investment is expected to generate 42.69 times less return on investment than Freedom Holding. But when comparing it to its historical volatility, Fidus Investment Corp is 2.0 times less risky than Freedom Holding. It trades about 0.01 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  11,810  in Freedom Holding Corp on September 25, 2024 and sell it today you would earn a total of  1,082  from holding Freedom Holding Corp or generate 9.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Fidus Investment Corp  vs.  Freedom Holding Corp

Fidus Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fidus Investment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Fidus Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Freedom Holding Corp

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fidus Investment and Freedom Holding

The main advantage of trading using opposite Fidus Investment and Freedom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidus Investment 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 Fidus Investment Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.