Correlation Between Converge Technology and Appen

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

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

Diversification Opportunities for Converge Technology and Appen

0.14

Correlation Coefficient

Converge Technology  Appen

Average diversification

The 3 months correlation between Converge and Appen is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Converge Technology Solutions and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited and Converge Technology 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 Converge Technology Solutions are associated (or correlated) with Appen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appen Limited has no effect on the direction of Converge Technology i.e., Converge Technology and Appen go up and down completely randomly.

Pair Corralation between Converge Technology and Appen

Assuming the 90 days horizon Converge Technology Solutions is expected to under-perform the Appen. But the otc stock apears to be less risky and, when comparing its historical volatility, Converge Technology Solutions is 1.72 times less risky than Appen. The otc stock trades about -0.15 of its potential returns per unit of risk. The Appen Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  70.00  in Appen Limited on September 28, 2024 and sell it today you would lose (4.00) from holding Appen Limited or give up 5.71% of portfolio value over 90 days.

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

Converge Technology Solutions  vs.  Appen Limited

Converge Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Converge Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 weak basic indicators, Appen may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Converge Technology and Appen

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

The idea behind Converge Technology Solutions and Appen Limited 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.