Correlation Between Alkami Technology and Open Text

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

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

Diversification Opportunities for Alkami Technology and Open Text

0.34

Correlation Coefficient

Alkami Technology  Open Text

Weak diversification

The 3 months correlation between Alkami and Open is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Alkami Technology and Open Text Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Open Text Corp and Alkami Technology 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 Alkami Technology are associated (or correlated) with Open Text. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Open Text Corp has no effect on the direction of Alkami Technology i.e., Alkami Technology and Open Text go up and down completely randomly.

Pair Corralation between Alkami Technology and Open Text

Given the investment horizon of 90 days Alkami Technology is expected to generate 1.39 times more return on investment than Open Text. However, Alkami Technology is 1.39 times more volatile than Open Text Corp. It trades about 0.08 of its potential returns per unit of risk. Open Text Corp is currently generating about 0.0 per unit of risk. If you would invest  1,011  in Alkami Technology on February 4, 2024 and sell it today you would earn a total of  1,722  from holding Alkami Technology or generate 170.33% return on investment over 90 days.

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

Alkami Technology  vs.  Open Text Corp

Alkami Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alkami Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady forward-looking signals, Alkami Technology may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Open Text Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Open Text Corp 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alkami Technology and Open Text

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

The idea behind Alkami Technology and Open Text Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .