Correlation Between International Business and Appen
Can any of the company-specific risk be diversified away by investing in both International Business 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 International Business and Appen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Appen Limited, you can compare the effects of market volatilities on International Business 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 International Business with a short position of Appen. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Appen.
Diversification Opportunities for International Business and Appen
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Appen is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited and International Business 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 International Business Machines 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 International Business i.e., International Business and Appen go up and down completely randomly.
Pair Corralation between International Business and Appen
Assuming the 90 days trading horizon International Business is expected to generate 1.95 times less return on investment than Appen. But when comparing it to its historical volatility, International Business Machines is 4.35 times less risky than Appen. It trades about 0.24 of its potential returns per unit of risk. Appen Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 120.00 in Appen Limited on August 30, 2024 and sell it today you would earn a total of 17.00 from holding Appen Limited or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Appen Limited
Performance |
| Timeline |
| International Business |
| Appen Limited |
International Business and Appen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Appen
The main advantage of trading using opposite International Business and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business 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.| International Business vs. FARO Technologies | International Business vs. KB HOME | International Business vs. PKSHA TECHNOLOGY INC | International Business vs. Autohome ADR |
| Appen vs. Perseus Mining Limited | Appen vs. GREENX METALS LTD | Appen vs. Broadcom | Appen vs. Transport International Holdings |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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