Correlation Between ServiceNow and Alumis Common

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

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

Diversification Opportunities for ServiceNow and Alumis Common

-0.74

Correlation Coefficient

ServiceNow  Alumis Common

Pay attention - limited upside

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

Pair Corralation between ServiceNow and Alumis Common

Considering the 90-day investment horizon ServiceNow is expected to under-perform the Alumis Common. But the stock apears to be less risky and, when comparing its historical volatility, ServiceNow is 2.19 times less risky than Alumis Common. The stock trades about -0.13 of its potential returns per unit of risk. The Alumis Common Stock is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  861.00  in Alumis Common Stock on October 8, 2024 and sell it today you would lose (16.00) from holding Alumis Common Stock or give up 1.86% of portfolio value over 90 days.

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

ServiceNow  vs.  Alumis Common Stock

ServiceNow

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ServiceNow are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, ServiceNow showed solid returns over the last few months and may actually be approaching a breakup point.

Alumis Common Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alumis Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ServiceNow and Alumis Common

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

The idea behind ServiceNow and Alumis Common Stock 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.