Correlation Between Appian Corp and Ducommun Incorporated

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

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

Diversification Opportunities for Appian Corp and Ducommun Incorporated

0.35

Correlation Coefficient

Appian Corp  Ducommun Incorporated

Weak diversification

The 3 months correlation between Appian and Ducommun is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Appian Corp and Ducommun Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducommun Incorporated and Appian Corp 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 Appian Corp are associated (or correlated) with Ducommun Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducommun Incorporated has no effect on the direction of Appian Corp i.e., Appian Corp and Ducommun Incorporated go up and down completely randomly.

Pair Corralation between Appian Corp and Ducommun Incorporated

Given the investment horizon of 90 days Appian Corp is expected to generate 1.54 times more return on investment than Ducommun Incorporated. However, Appian Corp is 1.54 times more volatile than Ducommun Incorporated. It trades about 0.01 of its potential returns per unit of risk. Ducommun Incorporated is currently generating about 0.0 per unit of risk. If you would invest  3,562  in Appian Corp on September 21, 2024 and sell it today you would lose (30.50) from holding Appian Corp or give up 0.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Appian Corp  vs.  Ducommun Incorporated

Appian Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Appian Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Appian Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ducommun Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ducommun Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Ducommun Incorporated is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Appian Corp and Ducommun Incorporated

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

The idea behind Appian Corp and Ducommun Incorporated 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 CEOs Directory module to screen CEOs from public companies around the world.