Correlation Between Zeta Global and Alarum Technologies

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

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

Diversification Opportunities for Zeta Global and Alarum Technologies

0.43

Correlation Coefficient

Zeta Global  Alarum Technologies

Very weak diversification

The 3 months correlation between Zeta and Alarum is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Zeta Global Holdings and Alarum Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarum Technologies and Zeta Global 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 Zeta Global Holdings are associated (or correlated) with Alarum Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alarum Technologies has no effect on the direction of Zeta Global i.e., Zeta Global and Alarum Technologies go up and down completely randomly.

Pair Corralation between Zeta Global and Alarum Technologies

Given the investment horizon of 90 days Zeta Global Holdings is expected to generate 0.92 times more return on investment than Alarum Technologies. However, Zeta Global Holdings is 1.08 times less risky than Alarum Technologies. It trades about -0.02 of its potential returns per unit of risk. Alarum Technologies is currently generating about -0.16 per unit of risk. If you would invest  1,767  in Zeta Global Holdings on December 27, 2024 and sell it today you would lose (194.00) from holding Zeta Global Holdings or give up 10.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Zeta Global Holdings  vs.  Alarum Technologies

Zeta Global Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zeta Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Zeta Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alarum Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alarum Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Zeta Global and Alarum Technologies

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

The idea behind Zeta Global Holdings and Alarum 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.