Correlation Between Appen and Sonasoft Corp

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

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

Diversification Opportunities for Appen and Sonasoft Corp

-0.22

Correlation Coefficient

Appen  Sonasoft Corp

Very good diversification

The 3 months correlation between Appen and Sonasoft is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Sonasoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonasoft 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 Sonasoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonasoft Corp has no effect on the direction of Appen i.e., Appen and Sonasoft Corp go up and down completely randomly.

Pair Corralation between Appen and Sonasoft Corp

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	1.54%
Values	Daily Returns

Appen Limited  vs.  Sonasoft 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.

Sonasoft Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonasoft Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Sonasoft Corp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Appen and Sonasoft Corp

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

The idea behind Appen Limited and Sonasoft 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.