Correlation Between Verint Systems and ALR Technologies

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

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

Diversification Opportunities for Verint Systems and ALR Technologies

-0.67

Correlation Coefficient

Verint Systems  ALR Technologies

Excellent diversification

The 3 months correlation between Verint and ALR is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Verint Systems and ALR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALR Technologies and Verint Systems 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 Verint Systems 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 Verint Systems i.e., Verint Systems and ALR Technologies go up and down completely randomly.

Pair Corralation between Verint Systems and ALR Technologies

Given the investment horizon of 90 days Verint Systems is expected to generate 0.29 times more return on investment than ALR Technologies. However, Verint Systems is 3.5 times less risky than ALR Technologies. It trades about 0.07 of its potential returns per unit of risk. ALR Technologies is currently generating about -0.04 per unit of risk. If you would invest  2,356  in Verint Systems on October 5, 2024 and sell it today you would earn a total of  319.00  from holding Verint Systems or generate 13.54% return on investment over 90 days.

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

Verint Systems  vs.  ALR Technologies

Verint Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Verint Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Verint Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

ALR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALR Technologies 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 basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Verint Systems and ALR Technologies

The main advantage of trading using opposite Verint Systems and ALR Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verint Systems 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 Verint Systems 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..