Correlation Between Appen and Crypto

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

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

Diversification Opportunities for Appen and Crypto

-0.09

Correlation Coefficient

Appen  Crypto

Good diversification

The 3 months correlation between Appen and Crypto is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Crypto Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crypto 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 Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crypto has no effect on the direction of Appen i.e., Appen and Crypto go up and down completely randomly.

Pair Corralation between Appen and Crypto

Assuming the 90 days horizon Appen is expected to generate 1.13 times less return on investment than Crypto. But when comparing it to its historical volatility, Appen Limited is 1.31 times less risky than Crypto. It trades about 0.06 of its potential returns per unit of risk. Crypto Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Crypto Co on September 4, 2024 and sell it today you would lose (20.93) from holding Crypto Co or give up 99.67% of portfolio value over 90 days.

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

Appen Limited  vs.  Crypto Co

Appen Limited

Risk-Adjusted Performance

10 of 100

OK

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

Crypto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crypto Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Appen and Crypto

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

The idea behind Appen Limited and Crypto Co 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.