Correlation Between Appen and CLPS
Can any of the company-specific risk be diversified away by investing in both Appen and CLPS 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 CLPS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appen Limited and CLPS Inc, you can compare the effects of market volatilities on Appen and CLPS 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 CLPS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and CLPS.
Diversification Opportunities for Appen and CLPS
Average diversification
The 3 months correlation between Appen and CLPS is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and CLPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLPS Inc 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 CLPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLPS Inc has no effect on the direction of Appen i.e., Appen and CLPS go up and down completely randomly.
Pair Corralation between Appen and CLPS
Assuming the 90 days horizon Appen Limited is expected to generate 1.48 times more return on investment than CLPS. However, Appen is 1.48 times more volatile than CLPS Inc. It trades about 0.04 of its potential returns per unit of risk. CLPS Inc is currently generating about -0.05 per unit of risk. If you would invest 70.00 in Appen Limited on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Appen Limited or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Appen Limited vs. CLPS Inc
Performance |
| Timeline |
| Appen Limited |
| CLPS Inc |
Appen and CLPS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appen and CLPS
The main advantage of trading using opposite Appen and CLPS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appen position performs unexpectedly, CLPS 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 CLPS will offset losses from the drop in CLPS's long position.The idea behind Appen Limited and CLPS Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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