Correlation Between Alarm Holdings and Absolute Software

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

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

Diversification Opportunities for Alarm Holdings and Absolute Software

0.0

Correlation Coefficient

Alarm Holdings  Absolute Software

Pay attention - limited upside

The 3 months correlation between Alarm and Absolute is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alarm Holdings and Absolute Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Software and Alarm Holdings 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 Alarm Holdings are associated (or correlated) with Absolute Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Software has no effect on the direction of Alarm Holdings i.e., Alarm Holdings and Absolute Software go up and down completely randomly.

Pair Corralation between Alarm Holdings and Absolute Software

If you would invest  5,773  in Alarm Holdings on May 27, 2025 and sell it today you would earn a total of  71.00  from holding Alarm Holdings or generate 1.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alarm Holdings  vs.  Absolute Software

Alarm Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alarm Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alarm Holdings is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Absolute Software

Risk-Adjusted Performance

Weakest

Over the last 90 days Absolute Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Absolute Software is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alarm Holdings and Absolute Software

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

The idea behind Alarm Holdings and Absolute Software 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.