Correlation Between Elastic NV and Alarm Holdings

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

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

Diversification Opportunities for Elastic NV and Alarm Holdings

0.39

Correlation Coefficient

Elastic NV  Alarm Holdings

Weak diversification

The 3 months correlation between Elastic and Alarm is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Elastic NV and Alarm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarm Holdings and Elastic NV 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 Elastic NV 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 Elastic NV i.e., Elastic NV and Alarm Holdings go up and down completely randomly.

Pair Corralation between Elastic NV and Alarm Holdings

Given the investment horizon of 90 days Elastic NV is expected to generate 1.52 times more return on investment than Alarm Holdings. However, Elastic NV is 1.52 times more volatile than Alarm Holdings. It trades about 0.05 of its potential returns per unit of risk. Alarm Holdings is currently generating about 0.03 per unit of risk. If you would invest  8,292  in Elastic NV on May 2, 2025 and sell it today you would earn a total of  507.00  from holding Elastic NV or generate 6.11% return on investment over 90 days.

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

Elastic NV  vs.  Alarm Holdings

Elastic NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elastic NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Elastic NV may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Alarm Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Alarm Holdings are ranked lower than 2 (%) 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.

Pair Trading with Elastic NV and Alarm Holdings

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

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 Stocks Directory module to find actively traded stocks across global markets.