Correlation Between Appen and Integrated Ventures

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

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

Diversification Opportunities for Appen and Integrated Ventures

0.41

Correlation Coefficient

Appen  Integrated Ventures

Very weak diversification

The 3 months correlation between Appen and Integrated is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Integrated Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Ventures 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 Integrated Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Ventures has no effect on the direction of Appen i.e., Appen and Integrated Ventures go up and down completely randomly.

Pair Corralation between Appen and Integrated Ventures

Assuming the 90 days horizon Appen Limited is expected to generate 2.65 times more return on investment than Integrated Ventures. However, Appen is 2.65 times more volatile than Integrated Ventures. It trades about 0.12 of its potential returns per unit of risk. Integrated Ventures is currently generating about 0.03 per unit of risk. If you would invest  16.00  in Appen Limited on September 26, 2024 and sell it today you would earn a total of  50.00  from holding Appen Limited or generate 312.5% return on investment over 90 days.

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

Appen Limited  vs.  Integrated Ventures

Appen Limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Appen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Integrated Ventures

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Integrated Ventures are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Integrated Ventures showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appen and Integrated Ventures

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

The idea behind Appen Limited and Integrated Ventures 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.