Correlation Between Appen and Spectral Cap

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

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

Diversification Opportunities for Appen and Spectral Cap

0.13

Correlation Coefficient

Appen  Spectral Cap

Average diversification

The 3 months correlation between Appen and Spectral is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Spectral Cap Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spectral Cap Corp 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 Spectral Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spectral Cap Corp has no effect on the direction of Appen i.e., Appen and Spectral Cap go up and down completely randomly.

Pair Corralation between Appen and Spectral Cap

Assuming the 90 days horizon Appen Limited is expected to generate 1.46 times more return on investment than Spectral Cap. However, Appen is 1.46 times more volatile than Spectral Cap Corp. It trades about 0.09 of its potential returns per unit of risk. Spectral Cap Corp is currently generating about 0.07 per unit of risk. If you would invest  49.00  in Appen Limited on September 23, 2024 and sell it today you would earn a total of  17.00  from holding Appen Limited or generate 34.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Appen Limited  vs.  Spectral Cap Corp

Appen Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 7 (%) 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.

Spectral Cap Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Spectral Cap Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal fundamental indicators, Spectral Cap displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appen and Spectral Cap

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

The idea behind Appen Limited and Spectral Cap 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.