Correlation Between Alkami Technology and PDF Solutions

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

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

Diversification Opportunities for Alkami Technology and PDF Solutions

0.91

Correlation Coefficient

Alkami Technology  PDF Solutions

Almost no diversification

The 3 months correlation between Alkami and PDF is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Alkami Technology and PDF Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDF Solutions 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 PDF Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDF Solutions has no effect on the direction of Alkami Technology i.e., Alkami Technology and PDF Solutions go up and down completely randomly.

Pair Corralation between Alkami Technology and PDF Solutions

Given the investment horizon of 90 days Alkami Technology is expected to under-perform the PDF Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Alkami Technology is 1.35 times less risky than PDF Solutions. The stock trades about -0.22 of its potential returns per unit of risk. The PDF Solutions is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  2,855  in PDF Solutions on December 21, 2024 and sell it today you would lose (759.00) from holding PDF Solutions or give up 26.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Alkami Technology  vs.  PDF Solutions

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.

PDF Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days PDF Solutions 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 technical and fundamental indicators 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.

Pair Trading with Alkami Technology and PDF Solutions

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

The idea behind Alkami Technology and PDF Solutions 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.