Correlation Between Cemtrex and Alarum Technologies

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

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

Diversification Opportunities for Cemtrex and Alarum Technologies

-0.52

Correlation Coefficient

Cemtrex  Alarum Technologies

Excellent diversification

The 3 months correlation between Cemtrex and Alarum is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cemtrex and Alarum Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarum Technologies and Cemtrex 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 Cemtrex are associated (or correlated) with Alarum Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alarum Technologies has no effect on the direction of Cemtrex i.e., Cemtrex and Alarum Technologies go up and down completely randomly.

Pair Corralation between Cemtrex and Alarum Technologies

Given the investment horizon of 90 days Cemtrex is expected to under-perform the Alarum Technologies. In addition to that, Cemtrex is 1.2 times more volatile than Alarum Technologies. It trades about -0.35 of its total potential returns per unit of risk. Alarum Technologies is currently generating about -0.06 per unit of volatility. If you would invest  3,414  in Alarum Technologies on September 5, 2024 and sell it today you would lose (2,180) from holding Alarum Technologies or give up 63.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cemtrex  vs.  Alarum Technologies

Cemtrex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemtrex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alarum Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alarum Technologies are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Alarum Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cemtrex and Alarum Technologies

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

The idea behind Cemtrex and Alarum Technologies 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.