Correlation Between Appen and Sanwire

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

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

Diversification Opportunities for Appen and Sanwire

-0.26

Correlation Coefficient

Appen  Sanwire

Very good diversification

The 3 months correlation between Appen and Sanwire is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Sanwire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanwire 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 Sanwire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanwire has no effect on the direction of Appen i.e., Appen and Sanwire go up and down completely randomly.

Pair Corralation between Appen and Sanwire

Assuming the 90 days horizon Appen Limited is expected to generate 0.54 times more return on investment than Sanwire. However, Appen Limited is 1.85 times less risky than Sanwire. It trades about 0.09 of its potential returns per unit of risk. Sanwire is currently generating about 0.05 per unit of risk. If you would invest  49.00  in Appen Limited on September 22, 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 Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Appen Limited  vs.  Sanwire

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.

Sanwire

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sanwire are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Sanwire reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appen and Sanwire

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

The idea behind Appen Limited and Sanwire 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.