Correlation Between Alarum Technologies and Confluent

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

By analyzing existing cross correlation between Alarum Technologies and Confluent, you can compare the effects of market volatilities on Alarum Technologies and Confluent 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 Confluent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alarum Technologies and Confluent.

Diversification Opportunities for Alarum Technologies and Confluent

0.08

Correlation Coefficient

Alarum Technologies  Confluent

Significant diversification

The 3 months correlation between Alarum and Confluent is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Alarum Technologies and Confluent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Confluent 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 Confluent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Confluent has no effect on the direction of Alarum Technologies i.e., Alarum Technologies and Confluent go up and down completely randomly.

Pair Corralation between Alarum Technologies and Confluent

Given the investment horizon of 90 days Alarum Technologies is expected to under-perform the Confluent. In addition to that, Alarum Technologies is 1.01 times more volatile than Confluent. It trades about -0.16 of its total potential returns per unit of risk. Confluent is currently generating about -0.01 per unit of volatility. If you would invest  2,823  in Confluent on December 28, 2024 and sell it today you would lose (227.00) from holding Confluent or give up 8.04% of portfolio value over 90 days.

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

Alarum Technologies  vs.  Confluent

Alarum Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alarum Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Confluent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Confluent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Confluent is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alarum Technologies and Confluent

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

The idea behind Alarum Technologies and Confluent 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.