Correlation Between Agora and Alarm Holdings
Can any of the company-specific risk be diversified away by investing in both Agora and Alarm Holdings 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 Agora and Alarm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agora Inc and Alarm Holdings, you can compare the effects of market volatilities on Agora and Alarm Holdings 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 Agora with a short position of Alarm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agora and Alarm Holdings.
Diversification Opportunities for Agora and Alarm Holdings
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Agora and Alarm is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Agora Inc and Alarm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarm Holdings and Agora 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 Agora Inc are associated (or correlated) with Alarm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alarm Holdings has no effect on the direction of Agora i.e., Agora and Alarm Holdings go up and down completely randomly.
Pair Corralation between Agora and Alarm Holdings
Considering the 90-day investment horizon Agora Inc is expected to under-perform the Alarm Holdings. In addition to that, Agora is 2.16 times more volatile than Alarm Holdings. It trades about -0.01 of its total potential returns per unit of risk. Alarm Holdings is currently generating about -0.01 per unit of volatility. If you would invest 5,748 in Alarm Holdings on June 12, 2025 and sell it today you would lose (122.00) from holding Alarm Holdings or give up 2.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Agora Inc vs. Alarm Holdings
Performance |
| Timeline |
| Agora Inc |
| Alarm Holdings |
Agora and Alarm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Agora and Alarm Holdings
The main advantage of trading using opposite Agora and Alarm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agora position performs unexpectedly, Alarm Holdings 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 Alarm Holdings will offset losses from the drop in Alarm Holdings' long position.The idea behind Agora Inc and Alarm Holdings 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.| Alarm Holdings vs. Alkami Technology | Alarm Holdings vs. ADEIA P | Alarm Holdings vs. Cerence | Alarm Holdings vs. Appfolio |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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