Correlation Between CACI International and Freedom Holding

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

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

Diversification Opportunities for CACI International and Freedom Holding

0.04

Correlation Coefficient

CACI International  Freedom Holding

Significant diversification

The 3 months correlation between CACI and Freedom is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CACI International 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 CACI International 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 CACI International 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 CACI International i.e., CACI International and Freedom Holding go up and down completely randomly.

Pair Corralation between CACI International and Freedom Holding

Given the investment horizon of 90 days CACI International is expected to generate 0.74 times more return on investment than Freedom Holding. However, CACI International is 1.34 times less risky than Freedom Holding. It trades about 0.21 of its potential returns per unit of risk. Freedom Holding Corp is currently generating about 0.02 per unit of risk. If you would invest  36,871  in CACI International on February 25, 2024 and sell it today you would earn a total of  6,031  from holding CACI International or generate 16.36% return on investment over 90 days.

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

CACI International  vs.  Freedom Holding Corp

CACI International

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CACI International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental indicators, CACI International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Freedom Holding Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Freedom Holding Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, Freedom Holding is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CACI International and Freedom Holding

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

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.