Correlation Between Alarum Technologies and CiT
Can any of the company-specific risk be diversified away by investing in both Alarum Technologies and CiT 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 Alarum Technologies and CiT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alarum Technologies and CiT Inc, you can compare the effects of market volatilities on Alarum Technologies and CiT 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 Alarum Technologies with a short position of CiT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alarum Technologies and CiT.
Diversification Opportunities for Alarum Technologies and CiT
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alarum and CiT is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Alarum Technologies and CiT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CiT Inc and Alarum Technologies 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 Alarum Technologies are associated (or correlated) with CiT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CiT Inc has no effect on the direction of Alarum Technologies i.e., Alarum Technologies and CiT go up and down completely randomly.
Pair Corralation between Alarum Technologies and CiT
Given the investment horizon of 90 days Alarum Technologies is expected to under-perform the CiT. But the stock apears to be less risky and, when comparing its historical volatility, Alarum Technologies is 1.1 times less risky than CiT. The stock trades about -0.22 of its potential returns per unit of risk. The CiT Inc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 613.00 in CiT Inc on November 3, 2024 and sell it today you would earn a total of 83.00 from holding CiT Inc or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alarum Technologies vs. CiT Inc
Performance |
| Timeline |
| Alarum Technologies |
| CiT Inc |
Alarum Technologies and CiT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alarum Technologies and CiT
The main advantage of trading using opposite Alarum Technologies and CiT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alarum Technologies position performs unexpectedly, CiT 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 CiT will offset losses from the drop in CiT's long position.| Alarum Technologies vs. Arqit Quantum | Alarum Technologies vs. Nutanix | Alarum Technologies vs. Palo Alto Networks | Alarum Technologies vs. GigaCloud Technology Class |
| CiT vs. Global Blue Group | CiT vs. EverCommerce | CiT vs. CSG Systems International | CiT vs. Consensus Cloud Solutions |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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