Correlation Between Alarum Technologies and Repay Holdings

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

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

Diversification Opportunities for Alarum Technologies and Repay Holdings

0.1

Correlation Coefficient

Alarum Technologies  Repay Holdings

Average diversification

The 3 months correlation between Alarum and Repay is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alarum Technologies and Repay Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Repay Holdings Corp 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 Repay Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Repay Holdings Corp has no effect on the direction of Alarum Technologies i.e., Alarum Technologies and Repay Holdings go up and down completely randomly.

Pair Corralation between Alarum Technologies and Repay Holdings

Given the investment horizon of 90 days Alarum Technologies is expected to generate 3.15 times more return on investment than Repay Holdings. However, Alarum Technologies is 3.15 times more volatile than Repay Holdings Corp. It trades about 0.07 of its potential returns per unit of risk. Repay Holdings Corp is currently generating about 0.0 per unit of risk. If you would invest  945.00  in Alarum Technologies on October 6, 2024 and sell it today you would earn a total of  155.00  from holding Alarum Technologies or generate 16.4% return on investment over 90 days.

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

Alarum Technologies  vs.  Repay Holdings Corp

Alarum Technologies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alarum Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Alarum Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Repay Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Repay Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Repay Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alarum Technologies and Repay Holdings

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

The idea behind Alarum Technologies and Repay Holdings 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.