Correlation Between Solowin Holdings and Franklin Resources

Can any of the company-specific risk be diversified away by investing in both Solowin Holdings and Franklin Resources 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 Solowin Holdings and Franklin Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Solowin Holdings Ordinary and Franklin Resources, you can compare the effects of market volatilities on Solowin Holdings and Franklin Resources 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 Solowin Holdings with a short position of Franklin Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solowin Holdings and Franklin Resources.

Diversification Opportunities for Solowin Holdings and Franklin Resources

-0.52

Correlation Coefficient

Solowin Holdings  Franklin Resources

Excellent diversification

The 3 months correlation between Solowin and Franklin is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Solowin Holdings Ordinary and Franklin Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Resources and Solowin Holdings 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 Solowin Holdings Ordinary are associated (or correlated) with Franklin Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Resources has no effect on the direction of Solowin Holdings i.e., Solowin Holdings and Franklin Resources go up and down completely randomly.

Pair Corralation between Solowin Holdings and Franklin Resources

Given the investment horizon of 90 days Solowin Holdings is expected to generate 2.4 times less return on investment than Franklin Resources. In addition to that, Solowin Holdings is 3.96 times more volatile than Franklin Resources. It trades about 0.02 of its total potential returns per unit of risk. Franklin Resources is currently generating about 0.16 per unit of volatility. If you would invest  1,954  in Franklin Resources on September 4, 2024 and sell it today you would earn a total of  305.00  from holding Franklin Resources or generate 15.61% return on investment over 90 days.

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

Solowin Holdings Ordinary  vs.  Franklin Resources

Solowin Holdings Ordinary

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solowin Holdings Ordinary are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Solowin Holdings is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Franklin Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal technical and fundamental indicators, Franklin Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solowin Holdings and Franklin Resources

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

The idea behind Solowin Holdings Ordinary and Franklin Resources 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.