Correlation Between Science Applications and Appen
Can any of the company-specific risk be diversified away by investing in both Science Applications and Appen 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 Science Applications and Appen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Appen Limited, you can compare the effects of market volatilities on Science Applications and Appen 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 Science Applications with a short position of Appen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Appen.
Diversification Opportunities for Science Applications and Appen
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Science and Appen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited and Science Applications 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 Science Applications International are associated (or correlated) with Appen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appen Limited has no effect on the direction of Science Applications i.e., Science Applications and Appen go up and down completely randomly.
Pair Corralation between Science Applications and Appen
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Appen. But the stock apears to be less risky and, when comparing its historical volatility, Science Applications International is 1.52 times less risky than Appen. The stock trades about -0.3 of its potential returns per unit of risk. The Appen Limited is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 166.00 in Appen Limited on September 14, 2024 and sell it today you would lose (30.00) from holding Appen Limited or give up 18.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Appen Limited
Performance |
| Timeline |
| Science Applications |
| Appen Limited |
Science Applications and Appen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Appen
The main advantage of trading using opposite Science Applications and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications position performs unexpectedly, Appen 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 Appen will offset losses from the drop in Appen's long position.| Science Applications vs. PSI Software AG | Science Applications vs. Universal Display | Science Applications vs. JD SPORTS FASH | Science Applications vs. Constellation Software |
| Appen vs. Science Applications International | Appen vs. Hyrican Informationssysteme Aktiengesellschaft | Appen vs. DOCDATA | Appen vs. Public Storage |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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