Correlation Between Nasdaq and ALR Technologies

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

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

Diversification Opportunities for Nasdaq and ALR Technologies

-0.03

Correlation Coefficient

Nasdaq  ALR Technologies

Good diversification

The 3 months correlation between Nasdaq and ALR is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and ALR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALR Technologies and Nasdaq 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 Nasdaq Inc are associated (or correlated) with ALR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALR Technologies has no effect on the direction of Nasdaq i.e., Nasdaq and ALR Technologies go up and down completely randomly.

Pair Corralation between Nasdaq and ALR Technologies

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the ALR Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 25.04 times less risky than ALR Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The ALR Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.00  in ALR Technologies on December 25, 2024 and sell it today you would lose (0.30) from holding ALR Technologies or give up 30.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Nasdaq Inc  vs.  ALR Technologies

Nasdaq Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

ALR Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALR Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, ALR Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nasdaq and ALR Technologies

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

The idea behind Nasdaq Inc and ALR 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.