Correlation Between Freedom Holding and Primo Brands

Can any of the company-specific risk be diversified away by investing in both Freedom Holding and Primo Brands 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 Primo Brands 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 Primo Brands, you can compare the effects of market volatilities on Freedom Holding and Primo Brands 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 Primo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Holding and Primo Brands.

Diversification Opportunities for Freedom Holding and Primo Brands

0.94

Correlation Coefficient

Freedom Holding  Primo Brands

Almost no diversification

The 3 months correlation between Freedom and Primo is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands 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 Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Freedom Holding i.e., Freedom Holding and Primo Brands go up and down completely randomly.

Pair Corralation between Freedom Holding and Primo Brands

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 0.76 times more return on investment than Primo Brands. However, Freedom Holding Corp is 1.32 times less risky than Primo Brands. It trades about 0.24 of its potential returns per unit of risk. Primo Brands is currently generating about 0.16 per unit of risk. If you would invest  11,747  in Freedom Holding Corp on September 23, 2024 and sell it today you would earn a total of  970.00  from holding Freedom Holding Corp or generate 8.26% return on investment over 90 days.

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

Freedom Holding Corp  vs.  Primo Brands

Freedom Holding Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Primo Brands

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Freedom Holding and Primo Brands

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

The idea behind Freedom Holding Corp and Primo Brands 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.