Correlation Between Alarum Technologies and StoneCo
Can any of the company-specific risk be diversified away by investing in both Alarum Technologies and StoneCo 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 StoneCo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alarum Technologies and StoneCo, you can compare the effects of market volatilities on Alarum Technologies and StoneCo 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 StoneCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alarum Technologies and StoneCo.
Diversification Opportunities for Alarum Technologies and StoneCo
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alarum and StoneCo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Alarum Technologies and StoneCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StoneCo 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 StoneCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StoneCo has no effect on the direction of Alarum Technologies i.e., Alarum Technologies and StoneCo go up and down completely randomly.
Pair Corralation between Alarum Technologies and StoneCo
Given the investment horizon of 90 days Alarum Technologies is expected to under-perform the StoneCo. In addition to that, Alarum Technologies is 2.92 times more volatile than StoneCo. It trades about -0.06 of its total potential returns per unit of risk. StoneCo is currently generating about -0.09 per unit of volatility. If you would invest 1,358 in StoneCo on September 1, 2024 and sell it today you would lose (410.00) from holding StoneCo or give up 30.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alarum Technologies vs. StoneCo
Performance |
| Timeline |
| Alarum Technologies |
| StoneCo |
Alarum Technologies and StoneCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alarum Technologies and StoneCo
The main advantage of trading using opposite Alarum Technologies and StoneCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alarum Technologies position performs unexpectedly, StoneCo 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 StoneCo will offset losses from the drop in StoneCo's long position.| Alarum Technologies vs. Palo Alto Networks | Alarum Technologies vs. GigaCloud Technology Class | Alarum Technologies vs. Pagaya Technologies | Alarum Technologies vs. Telos Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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