Correlation Between Alarum Technologies and SentinelOne

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

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

Diversification Opportunities for Alarum Technologies and SentinelOne

0.53

Correlation Coefficient

Alarum Technologies  SentinelOne

Very weak diversification

The 3 months correlation between Alarum and SentinelOne is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alarum Technologies and SentinelOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SentinelOne 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 SentinelOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SentinelOne has no effect on the direction of Alarum Technologies i.e., Alarum Technologies and SentinelOne go up and down completely randomly.

Pair Corralation between Alarum Technologies and SentinelOne

Given the investment horizon of 90 days Alarum Technologies is expected to generate 2.39 times more return on investment than SentinelOne. However, Alarum Technologies is 2.39 times more volatile than SentinelOne. It trades about 0.1 of its potential returns per unit of risk. SentinelOne is currently generating about 0.05 per unit of risk. If you would invest  239.00  in Alarum Technologies on September 12, 2024 and sell it today you would earn a total of  973.00  from holding Alarum Technologies or generate 407.11% 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.  SentinelOne

Alarum Technologies

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alarum Technologies are ranked lower than 2 (%) 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.

SentinelOne

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SentinelOne are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SentinelOne may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Alarum Technologies and SentinelOne

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

The idea behind Alarum Technologies and SentinelOne 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..