Correlation Between Appen and IBEX

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

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

Diversification Opportunities for Appen and IBEX

-0.28

Correlation Coefficient

Appen  IBEX

Very good diversification

The 3 months correlation between Appen and IBEX is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and IBEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBEX 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 IBEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBEX has no effect on the direction of Appen i.e., Appen and IBEX go up and down completely randomly.

Pair Corralation between Appen and IBEX

Assuming the 90 days horizon Appen Limited is expected to under-perform the IBEX. In addition to that, Appen is 3.75 times more volatile than IBEX. It trades about -0.11 of its total potential returns per unit of risk. IBEX is currently generating about 0.14 per unit of volatility. If you would invest  2,145  in IBEX on December 28, 2024 and sell it today you would earn a total of  382.00  from holding IBEX or generate 17.81% return on investment over 90 days.

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

Appen Limited  vs.  IBEX

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. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

IBEX

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in IBEX are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, IBEX showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appen and IBEX

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

The idea behind Appen Limited and IBEX 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.