Correlation Between Appen and Kontrol Technologies

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

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

Diversification Opportunities for Appen and Kontrol Technologies

0.15

Correlation Coefficient

Appen  Kontrol Technologies

Average diversification

The 3 months correlation between Appen and Kontrol is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Kontrol Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontrol Technologies 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 Kontrol Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontrol Technologies Corp has no effect on the direction of Appen i.e., Appen and Kontrol Technologies go up and down completely randomly.

Pair Corralation between Appen and Kontrol Technologies

Assuming the 90 days horizon Appen Limited is expected to under-perform the Kontrol Technologies. In addition to that, Appen is 1.49 times more volatile than Kontrol Technologies Corp. It trades about -0.05 of its total potential returns per unit of risk. Kontrol Technologies Corp is currently generating about 0.02 per unit of volatility. If you would invest  13.00  in Kontrol Technologies Corp on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Kontrol Technologies Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Appen Limited  vs.  Kontrol Technologies Corp

Appen Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Appen Limited 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 technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Kontrol Technologies Corp

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kontrol Technologies Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, Kontrol Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Appen and Kontrol Technologies

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

The idea behind Appen Limited and Kontrol Technologies 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.