Correlation Between Pegasystems and Alkami Technology

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

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

Diversification Opportunities for Pegasystems and Alkami Technology

0.85

Correlation Coefficient

Pegasystems  Alkami Technology

Very poor diversification

The 3 months correlation between Pegasystems and Alkami is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Pegasystems and Alkami Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkami Technology and Pegasystems 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 Pegasystems 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 Pegasystems i.e., Pegasystems and Alkami Technology go up and down completely randomly.

Pair Corralation between Pegasystems and Alkami Technology

Given the investment horizon of 90 days Pegasystems is expected to generate 1.34 times more return on investment than Alkami Technology. However, Pegasystems is 1.34 times more volatile than Alkami Technology. It trades about -0.11 of its potential returns per unit of risk. Alkami Technology is currently generating about -0.17 per unit of risk. If you would invest  9,326  in Pegasystems on December 30, 2024 and sell it today you would lose (2,374) from holding Pegasystems or give up 25.46% of portfolio value over 90 days.

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

Pegasystems  vs.  Alkami Technology

Pegasystems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pegasystems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Alkami Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alkami Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Pegasystems and Alkami Technology

The main advantage of trading using opposite Pegasystems and Alkami Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pegasystems 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 Pegasystems 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.