Correlation Between Appen and Skkynet Cloud

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

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

Diversification Opportunities for Appen and Skkynet Cloud

0.07

Correlation Coefficient

Appen  Skkynet Cloud

Significant diversification

The 3 months correlation between Appen and Skkynet is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Skkynet Cloud Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skkynet Cloud Systems 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 Skkynet Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skkynet Cloud Systems has no effect on the direction of Appen i.e., Appen and Skkynet Cloud go up and down completely randomly.

Pair Corralation between Appen and Skkynet Cloud

Assuming the 90 days horizon Appen Limited is expected to generate 0.79 times more return on investment than Skkynet Cloud. However, Appen Limited is 1.27 times less risky than Skkynet Cloud. It trades about 0.17 of its potential returns per unit of risk. Skkynet Cloud Systems is currently generating about -0.12 per unit of risk. If you would invest  72.00  in Appen Limited on October 10, 2024 and sell it today you would earn a total of  19.00  from holding Appen Limited or generate 26.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Appen Limited  vs.  Skkynet Cloud Systems

Appen Limited

Risk-Adjusted Performance

5 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Appen showed solid returns over the last few months and may actually be approaching a breakup point.

Skkynet Cloud Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skkynet Cloud Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, Skkynet Cloud showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appen and Skkynet Cloud

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

The idea behind Appen Limited and Skkynet Cloud Systems 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.