Correlation Between Freedom Holding and Focus Financial

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

Diversification Opportunities for Freedom Holding and Focus Financial

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between Freedom and Focus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Holding Corp and Focus Financial Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Focus Financial Partners 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 Focus Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Focus Financial Partners has no effect on the direction of Freedom Holding i.e., Freedom Holding and Focus Financial go up and down completely randomly.

Pair Corralation between Freedom Holding and Focus Financial

Given the investment horizon of 90 days Freedom Holding Corp is expected to generate 0.72 times more return on investment than Focus Financial. However, Freedom Holding Corp is 1.4 times less risky than Focus Financial. It trades about -0.27 of its potential returns per unit of risk. Focus Financial Partners is currently generating about -0.3 per unit of risk. If you would invest  5,499  in Freedom Holding Corp on July 5, 2022 and sell it today you would lose (588.00)  from holding Freedom Holding Corp or give up 10.69% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Freedom Holding Corp  vs.  Focus Financial Partners

 Performance (%) 
       Timeline  
Freedom Holding Corp 
Freedom Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical indicators, Freedom Holding may actually be approaching a critical reversion point that can send shares even higher in November 2022.

Freedom Price Channel

Focus Financial Partners 
Focus Performance
0 of 100
Over the last 90 days Focus Financial Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Focus Price Channel

Freedom Holding and Focus Financial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Freedom Holding and Focus Financial

The main advantage of trading using opposite Freedom Holding and Focus Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Holding position performs unexpectedly, Focus Financial 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 Focus Financial will offset losses from the drop in Focus Financial's long position.
Freedom Holding vs. Amazon Inc
The idea behind Freedom Holding Corp and Focus Financial Partners 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.
Focus Financial vs. Boeing Company
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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