Correlation Between Apple and Alarm Holdings

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

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

Diversification Opportunities for Apple and Alarm Holdings

-0.07

Correlation Coefficient

Apple  Alarm Holdings

Good diversification

The 3 months correlation between Apple and Alarm is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and Alarm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarm Holdings and Apple 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 Apple 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 Apple i.e., Apple and Alarm Holdings go up and down completely randomly.

Pair Corralation between Apple and Alarm Holdings

Assuming the 90 days trading horizon Apple Inc is expected to generate 1.04 times more return on investment than Alarm Holdings. However, Apple is 1.04 times more volatile than Alarm Holdings. It trades about 0.07 of its potential returns per unit of risk. Alarm Holdings is currently generating about 0.02 per unit of risk. If you would invest  17,440  in Apple Inc on May 6, 2025 and sell it today you would earn a total of  1,112  from holding Apple Inc or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Apple Inc  vs.  Alarm Holdings

Apple Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Apple may actually be approaching a critical reversion point that can send shares even higher in September 2025.

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 comparatively stable essential indicators, Alarm Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apple and Alarm Holdings

The main advantage of trading using opposite Apple and Alarm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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 Apple 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..