Correlation Between Alarum Technologies and GigaCloud Technology

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

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

Diversification Opportunities for Alarum Technologies and GigaCloud Technology

0.74

Correlation Coefficient

Alarum Technologies  GigaCloud Technology

Poor diversification

The 3 months correlation between Alarum and GigaCloud is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alarum Technologies and GigaCloud Technology Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaCloud Technology 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 GigaCloud Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaCloud Technology has no effect on the direction of Alarum Technologies i.e., Alarum Technologies and GigaCloud Technology go up and down completely randomly.

Pair Corralation between Alarum Technologies and GigaCloud Technology

Given the investment horizon of 90 days Alarum Technologies is expected to under-perform the GigaCloud Technology. In addition to that, Alarum Technologies is 1.27 times more volatile than GigaCloud Technology Class. It trades about -0.17 of its total potential returns per unit of risk. GigaCloud Technology Class is currently generating about -0.04 per unit of volatility. If you would invest  1,717  in GigaCloud Technology Class on December 29, 2024 and sell it today you would lose (206.00) from holding GigaCloud Technology Class or give up 12.0% of portfolio value over 90 days.

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

Alarum Technologies  vs.  GigaCloud Technology Class

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 weak 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.

GigaCloud Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days GigaCloud Technology Class has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Alarum Technologies and GigaCloud Technology

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

The idea behind Alarum Technologies and GigaCloud Technology Class 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.