Correlation Between Akamai Technologies and Appian Corp

Can any of the company-specific risk be diversified away by investing in both Akamai Technologies and Appian Corp 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 Akamai Technologies and Appian Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Akamai Technologies and Appian Corp, you can compare the effects of market volatilities on Akamai Technologies and Appian Corp 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 Akamai Technologies with a short position of Appian Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies and Appian Corp.

Diversification Opportunities for Akamai Technologies and Appian Corp

-0.54

Correlation Coefficient

Akamai Technologies  Appian Corp

Excellent diversification

The 3 months correlation between Akamai and Appian is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies and Appian Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appian Corp and Akamai Technologies 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 Akamai Technologies are associated (or correlated) with Appian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appian Corp has no effect on the direction of Akamai Technologies i.e., Akamai Technologies and Appian Corp go up and down completely randomly.

Pair Corralation between Akamai Technologies and Appian Corp

Given the investment horizon of 90 days Akamai Technologies is expected to under-perform the Appian Corp. But the stock apears to be less risky and, when comparing its historical volatility, Akamai Technologies is 1.1 times less risky than Appian Corp. The stock trades about -0.03 of its potential returns per unit of risk. The Appian Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,161  in Appian Corp on September 2, 2024 and sell it today you would earn a total of  624.00  from holding Appian Corp or generate 19.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Akamai Technologies  vs.  Appian Corp

Akamai Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Akamai Technologies is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Appian Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appian Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Appian Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Akamai Technologies and Appian Corp

The main advantage of trading using opposite Akamai Technologies and Appian Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akamai Technologies position performs unexpectedly, Appian Corp 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 Appian Corp will offset losses from the drop in Appian Corp's long position.

The idea behind Akamai Technologies and Appian Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.