Correlation Between Legacy Iron and Appen
Can any of the company-specific risk be diversified away by investing in both Legacy Iron 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 Legacy Iron and Appen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legacy Iron Ore and Appen, you can compare the effects of market volatilities on Legacy Iron 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 Legacy Iron with a short position of Appen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legacy Iron and Appen.
Diversification Opportunities for Legacy Iron and Appen
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Legacy and Appen is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Legacy Iron Ore and Appen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen and Legacy Iron 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 Legacy Iron Ore 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 has no effect on the direction of Legacy Iron i.e., Legacy Iron and Appen go up and down completely randomly.
Pair Corralation between Legacy Iron and Appen
Assuming the 90 days trading horizon Legacy Iron Ore is expected to under-perform the Appen. But the stock apears to be less risky and, when comparing its historical volatility, Legacy Iron Ore is 1.73 times less risky than Appen. The stock trades about -0.15 of its potential returns per unit of risk. The Appen is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 150.00 in Appen on September 12, 2024 and sell it today you would earn a total of 67.00 from holding Appen or generate 44.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legacy Iron Ore vs. Appen
Performance |
| Timeline |
| Legacy Iron Ore |
| Appen |
Legacy Iron and Appen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legacy Iron and Appen
The main advantage of trading using opposite Legacy Iron and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legacy Iron 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.| Legacy Iron vs. Northern Star Resources | Legacy Iron vs. Evolution Mining | Legacy Iron vs. Bluescope Steel | Legacy Iron vs. Sandfire Resources NL |
| Appen vs. WiseTech Global Limited | Appen vs. Farm Pride Foods | Appen vs. MetalsGrove Mining | Appen vs. Black Rock Mining |
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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