Correlation Between Alarum Technologies and Semtech

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

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

Diversification Opportunities for Alarum Technologies and Semtech

0.35

Correlation Coefficient

Alarum Technologies  Semtech

Weak diversification

The 3 months correlation between Alarum and Semtech is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Alarum Technologies and Semtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semtech and Alarum Technologies 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 Alarum Technologies are associated (or correlated) with Semtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semtech has no effect on the direction of Alarum Technologies i.e., Alarum Technologies and Semtech go up and down completely randomly.

Pair Corralation between Alarum Technologies and Semtech

Given the investment horizon of 90 days Alarum Technologies is expected to generate 1.87 times less return on investment than Semtech. In addition to that, Alarum Technologies is 1.11 times more volatile than Semtech. It trades about 0.09 of its total potential returns per unit of risk. Semtech is currently generating about 0.18 per unit of volatility. If you would invest  4,856  in Semtech on July 10, 2025 and sell it today you would earn a total of  2,235  from holding Semtech or generate 46.03% return on investment over 90 days.

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

Alarum Technologies  vs.  Semtech

Alarum Technologies

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Alarum Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Alarum Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Semtech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alarum Technologies and Semtech

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

The idea behind Alarum Technologies and Semtech 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.