Correlation Between Appen and VSE
Can any of the company-specific risk be diversified away by investing in both Appen and VSE 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 VSE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appen Limited and VSE Corporation, you can compare the effects of market volatilities on Appen and VSE 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 VSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and VSE.
Diversification Opportunities for Appen and VSE
Poor diversification
The 3 months correlation between Appen and VSE is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and VSE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSE Corporation 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 VSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSE Corporation has no effect on the direction of Appen i.e., Appen and VSE go up and down completely randomly.
Pair Corralation between Appen and VSE
Assuming the 90 days horizon Appen Limited is expected to generate 8.13 times more return on investment than VSE. However, Appen is 8.13 times more volatile than VSE Corporation. It trades about 0.16 of its potential returns per unit of risk. VSE Corporation is currently generating about 0.24 per unit of risk. If you would invest 99.00 in Appen Limited on September 2, 2024 and sell it today you would earn a total of 53.00 from holding Appen Limited or generate 53.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Appen Limited vs. VSE Corp.
Performance |
| Timeline |
| Appen Limited |
| VSE Corporation |
Appen and VSE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appen and VSE
The main advantage of trading using opposite Appen and VSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appen position performs unexpectedly, VSE 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 VSE will offset losses from the drop in VSE's long position.| Appen vs. Appen Limited | Appen vs. Direct Communication Solutions | Appen vs. Capgemini SE ADR | Appen vs. Quisitive Technology Solutions |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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