Correlation Between Freedom Holding and Papaya Growth

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

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

Diversification Opportunities for Freedom Holding and Papaya Growth

0.11

Correlation Coefficient

Freedom Holding  Papaya Growth

Average diversification

The 3 months correlation between Freedom and Papaya is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Papaya Growth Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Papaya Growth Opportunity and Freedom Holding 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 Freedom Holding Corp are associated (or correlated) with Papaya Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Papaya Growth Opportunity has no effect on the direction of Freedom Holding i.e., Freedom Holding and Papaya Growth go up and down completely randomly.

Pair Corralation between Freedom Holding and Papaya Growth

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 4.86 times more return on investment than Papaya Growth. However, Freedom Holding is 4.86 times more volatile than Papaya Growth Opportunity. It trades about 0.28 of its potential returns per unit of risk. Papaya Growth Opportunity is currently generating about -0.04 per unit of risk. If you would invest  9,476  in Freedom Holding Corp on September 28, 2024 and sell it today you would earn a total of  3,539  from holding Freedom Holding Corp or generate 37.35% return on investment over 90 days.

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

Freedom Holding Corp  vs.  Papaya Growth Opportunity

Freedom Holding Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 22 (%) 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.

Papaya Growth Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Papaya Growth Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Papaya Growth is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Freedom Holding and Papaya Growth

The main advantage of trading using opposite Freedom Holding and Papaya Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding position performs unexpectedly, Papaya Growth 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 Papaya Growth will offset losses from the drop in Papaya Growth's long position.

The idea behind Freedom Holding Corp and Papaya Growth Opportunity 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.