Correlation Between ALM Equity and Upsales Technology

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

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

Diversification Opportunities for ALM Equity and Upsales Technology

0.0

Correlation Coefficient

ALM Equity  Upsales Technology

Pay attention - limited upside

The 3 months correlation between ALM and Upsales is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ALM Equity AB and Upsales Technology AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Upsales Technology and ALM Equity 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 ALM Equity AB are associated (or correlated) with Upsales Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Upsales Technology has no effect on the direction of ALM Equity i.e., ALM Equity and Upsales Technology go up and down completely randomly.

Pair Corralation between ALM Equity and Upsales Technology

Assuming the 90 days trading horizon ALM Equity AB is expected to under-perform the Upsales Technology. But the stock apears to be less risky and, when comparing its historical volatility, ALM Equity AB is 3.23 times less risky than Upsales Technology. The stock trades about -0.01 of its potential returns per unit of risk. The Upsales Technology AB is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,160  in Upsales Technology AB on December 2, 2024 and sell it today you would earn a total of  340.00  from holding Upsales Technology AB or generate 10.76% return on investment over 90 days.

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

ALM Equity AB  vs.  Upsales Technology AB

ALM Equity AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALM Equity AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ALM Equity is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Upsales Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Upsales Technology AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Upsales Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ALM Equity and Upsales Technology

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

The idea behind ALM Equity AB and Upsales Technology AB 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.