Correlation Between Appian Corp and MongoDB

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

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

Diversification Opportunities for Appian Corp and MongoDB

0.43

Correlation Coefficient

Appian Corp  MongoDB

Very weak diversification

The 3 months correlation between Appian and MongoDB is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Appian Corp and MongoDB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MongoDB 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 MongoDB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MongoDB has no effect on the direction of Appian Corp i.e., Appian Corp and MongoDB go up and down completely randomly.

Pair Corralation between Appian Corp and MongoDB

Given the investment horizon of 90 days Appian Corp is expected to generate 0.86 times more return on investment than MongoDB. However, Appian Corp is 1.17 times less risky than MongoDB. It trades about 0.13 of its potential returns per unit of risk. MongoDB is currently generating about 0.09 per unit of risk. If you would invest  3,161  in Appian Corp on September 1, 2024 and sell it today you would earn a total of  624.00  from holding Appian Corp or generate 19.74% return on investment over 90 days.

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

Appian Corp  vs.  MongoDB

Appian Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appian Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Appian Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

MongoDB

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Appian Corp and MongoDB

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

The idea behind Appian Corp and MongoDB 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.