Correlation Between Appfolio and Alkami Technology

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

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

Diversification Opportunities for Appfolio and Alkami Technology

0.74

Correlation Coefficient

Appfolio  Alkami Technology

Poor diversification

The 3 months correlation between Appfolio and Alkami is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Appfolio and Alkami Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkami Technology and Appfolio 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 Appfolio are associated (or correlated) with Alkami Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkami Technology has no effect on the direction of Appfolio i.e., Appfolio and Alkami Technology go up and down completely randomly.

Pair Corralation between Appfolio and Alkami Technology

Given the investment horizon of 90 days Appfolio is expected to generate 0.79 times more return on investment than Alkami Technology. However, Appfolio is 1.27 times less risky than Alkami Technology. It trades about -0.06 of its potential returns per unit of risk. Alkami Technology is currently generating about -0.17 per unit of risk. If you would invest  24,723  in Appfolio on December 29, 2024 and sell it today you would lose (2,204) from holding Appfolio or give up 8.91% of portfolio value over 90 days.

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

Appfolio  vs.  Alkami Technology

Appfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Appfolio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with Appfolio and Alkami Technology

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

The idea behind Appfolio and Alkami Technology 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.