Correlation Between Alarm Holdings and DubberLimited

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

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

Diversification Opportunities for Alarm Holdings and DubberLimited

0.08

Correlation Coefficient

Alarm Holdings  DubberLimited

Significant diversification

The 3 months correlation between Alarm and DubberLimited is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Alarm Holdings and Dubber Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dubber Limited and Alarm Holdings 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 Alarm Holdings are associated (or correlated) with DubberLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dubber Limited has no effect on the direction of Alarm Holdings i.e., Alarm Holdings and DubberLimited go up and down completely randomly.

Pair Corralation between Alarm Holdings and DubberLimited

Given the investment horizon of 90 days Alarm Holdings is expected to generate 72.34 times less return on investment than DubberLimited. But when comparing it to its historical volatility, Alarm Holdings is 33.79 times less risky than DubberLimited. It trades about 0.02 of its potential returns per unit of risk. Dubber Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Dubber Limited on October 3, 2024 and sell it today you would lose (14.50) from holding Dubber Limited or give up 85.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.26%
Values	Daily Returns

Alarm Holdings  vs.  Dubber Limited

Alarm Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alarm Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Alarm Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Dubber Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dubber Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DubberLimited reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alarm Holdings and DubberLimited

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

The idea behind Alarm Holdings and Dubber Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.