Correlation Between Hub Cyber and Alarum Technologies

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

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

Diversification Opportunities for Hub Cyber and Alarum Technologies

-0.08

Correlation Coefficient

Hub Cyber  Alarum Technologies

Good diversification

The 3 months correlation between Hub and Alarum is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Hub Cyber Security and Alarum Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarum Technologies and Hub Cyber 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 Hub Cyber Security 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 Hub Cyber i.e., Hub Cyber and Alarum Technologies go up and down completely randomly.

Pair Corralation between Hub Cyber and Alarum Technologies

Assuming the 90 days horizon Hub Cyber Security is expected to generate 5.76 times more return on investment than Alarum Technologies. However, Hub Cyber is 5.76 times more volatile than Alarum Technologies. It trades about 0.1 of its potential returns per unit of risk. Alarum Technologies is currently generating about -0.16 per unit of risk. If you would invest  3.55  in Hub Cyber Security on December 28, 2024 and sell it today you would lose (1.19) from holding Hub Cyber Security or give up 33.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Hub Cyber Security  vs.  Alarum Technologies

Hub Cyber Security

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hub Cyber Security are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Hub Cyber showed solid returns over the last few months and may actually be approaching a breakup point.

Alarum Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alarum Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Hub Cyber and Alarum Technologies

The main advantage of trading using opposite Hub Cyber and Alarum Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hub Cyber 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 Hub Cyber Security 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..