Correlation Between Appen and Cimpress

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

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

Diversification Opportunities for Appen and Cimpress

0.2

Correlation Coefficient

Appen  Cimpress

Modest diversification

The 3 months correlation between Appen and Cimpress is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Cimpress NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cimpress NV 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 Cimpress. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cimpress NV has no effect on the direction of Appen i.e., Appen and Cimpress go up and down completely randomly.

Pair Corralation between Appen and Cimpress

Assuming the 90 days horizon Appen Limited is expected to generate 2.14 times more return on investment than Cimpress. However, Appen is 2.14 times more volatile than Cimpress NV. It trades about -0.06 of its potential returns per unit of risk. Cimpress NV is currently generating about -0.52 per unit of risk. If you would invest  152.00  in Appen Limited on October 8, 2024 and sell it today you would lose (8.00) from holding Appen Limited or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Appen Limited  vs.  Cimpress NV

Appen Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Appen reported solid returns over the last few months and may actually be approaching a breakup point.

Cimpress NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cimpress NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest abnormal performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Appen and Cimpress

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

The idea behind Appen Limited and Cimpress NV 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.