Correlation Between LiveChat Software and Alkami Technology

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

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

Diversification Opportunities for LiveChat Software and Alkami Technology

-0.7

Correlation Coefficient

LiveChat Software  Alkami Technology

Excellent diversification

The 3 months correlation between LiveChat and Alkami is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding LiveChat Software SA and Alkami Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkami Technology and LiveChat Software 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 LiveChat Software SA 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 LiveChat Software i.e., LiveChat Software and Alkami Technology go up and down completely randomly.

Pair Corralation between LiveChat Software and Alkami Technology

Assuming the 90 days horizon LiveChat Software SA is expected to under-perform the Alkami Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, LiveChat Software SA is 1.11 times less risky than Alkami Technology. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Alkami Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,367  in Alkami Technology on October 15, 2024 and sell it today you would earn a total of  48.00  from holding Alkami Technology or generate 1.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

LiveChat Software SA  vs.  Alkami Technology

LiveChat Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LiveChat Software SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LiveChat Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alkami Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alkami Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Alkami Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with LiveChat Software and Alkami Technology

The main advantage of trading using opposite LiveChat Software and Alkami Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LiveChat Software 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 LiveChat Software SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.