Correlation Between ODDITY Tech and Alarm Holdings

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

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

Diversification Opportunities for ODDITY Tech and Alarm Holdings

0.81

Correlation Coefficient

ODDITY Tech  Alarm Holdings

Very poor diversification

The 3 months correlation between ODDITY and Alarm is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ODDITY Tech Ltd and Alarm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alarm Holdings and ODDITY Tech 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 ODDITY Tech Ltd 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 ODDITY Tech i.e., ODDITY Tech and Alarm Holdings go up and down completely randomly.

Pair Corralation between ODDITY Tech and Alarm Holdings

Considering the 90-day investment horizon ODDITY Tech Ltd is expected to under-perform the Alarm Holdings. In addition to that, ODDITY Tech is 1.54 times more volatile than Alarm Holdings. It trades about -0.16 of its total potential returns per unit of risk. Alarm Holdings is currently generating about -0.05 per unit of volatility. If you would invest  5,710  in Alarm Holdings on August 26, 2025 and sell it today you would lose (447.00) from holding Alarm Holdings or give up 7.83% of portfolio value over 90 days.

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

ODDITY Tech Ltd  vs.  Alarm Holdings

ODDITY Tech

Risk-Adjusted Performance

Weakest

Over the last 90 days ODDITY Tech Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in December 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Alarm Holdings

Risk-Adjusted Performance

Weakest

Over the last 90 days Alarm Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ODDITY Tech and Alarm Holdings

The main advantage of trading using opposite ODDITY Tech and Alarm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ODDITY Tech 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 ODDITY Tech Ltd 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.