Correlation Between Alarm Holdings and Swvl Holdings

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

By analyzing existing cross correlation between Alarm Holdings and Swvl Holdings Corp, you can compare the effects of market volatilities on Alarm Holdings and Swvl Holdings 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 Swvl Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alarm Holdings and Swvl Holdings.

Diversification Opportunities for Alarm Holdings and Swvl Holdings

0.06

Correlation Coefficient

Alarm Holdings  Swvl Holdings

Significant diversification

The 3 months correlation between Alarm and Swvl is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Alarm Holdings and Swvl Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swvl Holdings Corp 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 Swvl Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swvl Holdings Corp has no effect on the direction of Alarm Holdings i.e., Alarm Holdings and Swvl Holdings go up and down completely randomly.

Pair Corralation between Alarm Holdings and Swvl Holdings

Given the investment horizon of 90 days Alarm Holdings is expected to generate 0.37 times more return on investment than Swvl Holdings. However, Alarm Holdings is 2.68 times less risky than Swvl Holdings. It trades about 0.36 of its potential returns per unit of risk. Swvl Holdings Corp is currently generating about -0.42 per unit of risk. If you would invest  5,985  in Alarm Holdings on September 16, 2024 and sell it today you would earn a total of  726.00  from holding Alarm Holdings or generate 12.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Alarm Holdings  vs.  Swvl Holdings Corp

Alarm Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alarm Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Alarm Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Swvl Holdings Corp

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Swvl Holdings Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Swvl Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alarm Holdings and Swvl Holdings

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

The idea behind Alarm Holdings and Swvl Holdings Corp 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 Global Correlations module to find global opportunities by holding instruments from different markets.