Correlation Between Appen and Flint Telecom

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

By analyzing existing cross correlation between Appen Limited and Flint Telecom Group, you can compare the effects of market volatilities on Appen and Flint Telecom 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 Flint Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and Flint Telecom.

Diversification Opportunities for Appen and Flint Telecom

-0.64

Correlation Coefficient

Appen  Flint Telecom

Excellent diversification

The 3 months correlation between Appen and Flint is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Flint Telecom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flint Telecom Group 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 Flint Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flint Telecom Group has no effect on the direction of Appen i.e., Appen and Flint Telecom go up and down completely randomly.

Pair Corralation between Appen and Flint Telecom

Assuming the 90 days horizon Appen Limited is expected to generate 1.6 times more return on investment than Flint Telecom. However, Appen is 1.6 times more volatile than Flint Telecom Group. It trades about 0.14 of its potential returns per unit of risk. Flint Telecom Group is currently generating about -0.02 per unit of risk. If you would invest  33.00  in Appen Limited on September 5, 2024 and sell it today you would earn a total of  36.00  from holding Appen Limited or generate 109.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Appen Limited  vs.  Flint Telecom Group

Appen Limited

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Appen showed solid returns over the last few months and may actually be approaching a breakup point.

Flint Telecom Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Flint Telecom Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Appen and Flint Telecom

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

The idea behind Appen Limited and Flint Telecom Group 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.