Correlation Between Alkami Technology and AudioEye

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

By analyzing existing cross correlation between Alkami Technology and AudioEye, you can compare the effects of market volatilities on Alkami Technology and AudioEye 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 Alkami Technology with a short position of AudioEye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkami Technology and AudioEye.

Diversification Opportunities for Alkami Technology and AudioEye

0.81

Correlation Coefficient

Alkami Technology  AudioEye

Very poor diversification

The 3 months correlation between Alkami and AudioEye is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alkami Technology and AudioEye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioEye and Alkami Technology 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 Alkami Technology are associated (or correlated) with AudioEye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioEye has no effect on the direction of Alkami Technology i.e., Alkami Technology and AudioEye go up and down completely randomly.

Pair Corralation between Alkami Technology and AudioEye

Given the investment horizon of 90 days Alkami Technology is expected to under-perform the AudioEye. But the stock apears to be less risky and, when comparing its historical volatility, Alkami Technology is 1.73 times less risky than AudioEye. The stock trades about -0.17 of its potential returns per unit of risk. The AudioEye is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,562  in AudioEye on December 29, 2024 and sell it today you would lose (436.00) from holding AudioEye or give up 27.91% of portfolio value over 90 days.

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

Alkami Technology  vs.  AudioEye

Alkami Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alkami Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AudioEye

Risk-Adjusted Performance

Very Weak

Over the last 90 days AudioEye has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Alkami Technology and AudioEye

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

The idea behind Alkami Technology and AudioEye 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.