Correlation Between Appen and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both Appen and Westlake Chemical 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 Appen and Westlake Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appen Limited and Westlake Chemical, you can compare the effects of market volatilities on Appen and Westlake Chemical 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 Appen with a short position of Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and Westlake Chemical.
Diversification Opportunities for Appen and Westlake Chemical
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Appen and Westlake is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Westlake Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical and Appen 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 Appen Limited are associated (or correlated) with Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical has no effect on the direction of Appen i.e., Appen and Westlake Chemical go up and down completely randomly.
Pair Corralation between Appen and Westlake Chemical
Assuming the 90 days horizon Appen Limited is expected to generate 4.55 times more return on investment than Westlake Chemical. However, Appen is 4.55 times more volatile than Westlake Chemical. It trades about 0.13 of its potential returns per unit of risk. Westlake Chemical is currently generating about -0.05 per unit of risk. If you would invest 91.00 in Appen Limited on September 12, 2024 and sell it today you would earn a total of 45.00 from holding Appen Limited or generate 49.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Appen Limited vs. Westlake Chemical
Performance |
| Timeline |
| Appen Limited |
| Westlake Chemical |
Appen and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appen and Westlake Chemical
The main advantage of trading using opposite Appen and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appen position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical's long position.| Appen vs. DELTA AIR LINES | Appen vs. INTERSHOP Communications Aktiengesellschaft | Appen vs. Gamma Communications plc | Appen vs. Entravision Communications |
| Westlake Chemical vs. Albemarle | Westlake Chemical vs. Superior Plus Corp | Westlake Chemical vs. SIVERS SEMICONDUCTORS AB | Westlake Chemical vs. Norsk Hydro ASA |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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