Correlation Between Appen and Aurora Innovation
Can any of the company-specific risk be diversified away by investing in both Appen and Aurora Innovation 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 Aurora Innovation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appen Limited and Aurora Innovation, you can compare the effects of market volatilities on Appen and Aurora Innovation 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 Aurora Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and Aurora Innovation.
Diversification Opportunities for Appen and Aurora Innovation
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Appen and Aurora is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Aurora Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Innovation 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 Aurora Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Innovation has no effect on the direction of Appen i.e., Appen and Aurora Innovation go up and down completely randomly.
Pair Corralation between Appen and Aurora Innovation
Assuming the 90 days horizon Appen Limited is expected to generate 0.64 times more return on investment than Aurora Innovation. However, Appen Limited is 1.56 times less risky than Aurora Innovation. It trades about 0.14 of its potential returns per unit of risk. Aurora Innovation is currently generating about 0.07 per unit of risk. If you would invest 66.00 in Appen Limited on October 25, 2024 and sell it today you would earn a total of 14.00 from holding Appen Limited or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Appen Limited vs. Aurora Innovation
Performance |
| Timeline |
| Appen Limited |
| Aurora Innovation |
Appen and Aurora Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appen and Aurora Innovation
The main advantage of trading using opposite Appen and Aurora Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appen position performs unexpectedly, Aurora Innovation 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 Aurora Innovation will offset losses from the drop in Aurora Innovation's long position.| Appen vs. Atos Origin SA | Appen vs. Aurora Innovation | Appen vs. Appen Limited | Appen vs. Direct Communication 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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