Correlation Between WiseTech Global and Appen
Can any of the company-specific risk be diversified away by investing in both WiseTech Global 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 WiseTech Global and Appen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WiseTech Global Limited and Appen, you can compare the effects of market volatilities on WiseTech Global 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 WiseTech Global with a short position of Appen. Check out your portfolio center. Please also check ongoing floating volatility patterns of WiseTech Global and Appen.
Diversification Opportunities for WiseTech Global and Appen
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WiseTech and Appen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding WiseTech Global Limited and Appen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen and WiseTech Global 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 WiseTech Global Limited 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 WiseTech Global i.e., WiseTech Global and Appen go up and down completely randomly.
Pair Corralation between WiseTech Global and Appen
Assuming the 90 days trading horizon WiseTech Global Limited is expected to generate 0.2 times more return on investment than Appen. However, WiseTech Global Limited is 5.08 times less risky than Appen. It trades about -0.42 of its potential returns per unit of risk. Appen is currently generating about -0.39 per unit of risk. If you would invest 9,713 in WiseTech Global Limited on December 25, 2024 and sell it today you would lose (1,507) from holding WiseTech Global Limited or give up 15.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
WiseTech Global Limited vs. Appen
Performance |
| Timeline |
| WiseTech Global |
| Appen |
WiseTech Global and Appen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WiseTech Global and Appen
The main advantage of trading using opposite WiseTech Global and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WiseTech Global 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.| WiseTech Global vs. Data3 | WiseTech Global vs. Perseus Mining | WiseTech Global vs. Gold Road Resources | WiseTech Global vs. Hutchison Telecommunications |
| Appen vs. Home Consortium | Appen vs. Sandon Capital Investments | Appen vs. Alternative Investment Trust | Appen vs. Argo Investments |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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