Correlation Between Montauk Renewables and Freedom Holding

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

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

Diversification Opportunities for Montauk Renewables and Freedom Holding

-0.74

Correlation Coefficient

Montauk Renewables  Freedom Holding

Pay attention - limited upside

The 3 months correlation between Montauk and Freedom is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables 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 Montauk Renewables i.e., Montauk Renewables and Freedom Holding go up and down completely randomly.

Pair Corralation between Montauk Renewables and Freedom Holding

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Freedom Holding. In addition to that, Montauk Renewables is 2.2 times more volatile than Freedom Holding Corp. It trades about -0.08 of its total potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.25 per unit of volatility. If you would invest  9,587  in Freedom Holding Corp on September 21, 2024 and sell it today you would earn a total of  3,133  from holding Freedom Holding Corp or generate 32.68% return on investment over 90 days.

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

Montauk Renewables  vs.  Freedom Holding Corp

Montauk Renewables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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 conflicting technical indicators, Freedom Holding exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Montauk Renewables and Freedom Holding

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

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.