Correlation Between Alkami Technology and BASE

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

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

Diversification Opportunities for Alkami Technology and BASE

-0.27

Correlation Coefficient

Alkami Technology  BASE

Very good diversification

The 3 months correlation between Alkami and BASE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alkami Technology and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc 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 BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of Alkami Technology i.e., Alkami Technology and BASE go up and down completely randomly.

Pair Corralation between Alkami Technology and BASE

Given the investment horizon of 90 days Alkami Technology is expected to generate 13.84 times less return on investment than BASE. But when comparing it to its historical volatility, Alkami Technology is 2.69 times less risky than BASE. It trades about 0.04 of its potential returns per unit of risk. BASE Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  150.00  in BASE Inc on September 28, 2024 and sell it today you would earn a total of  44.00  from holding BASE Inc or generate 29.33% return on investment over 90 days.

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

Alkami Technology  vs.  BASE Inc

Alkami Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alkami Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking signals, Alkami Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkami Technology and BASE

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

The idea behind Alkami Technology and BASE Inc 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.