Correlation Between Appen and Xalles Holdings

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

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

Diversification Opportunities for Appen and Xalles Holdings

0.46

Correlation Coefficient

Appen  Xalles Holdings

Very weak diversification

The 3 months correlation between Appen and Xalles is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Xalles Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xalles Holdings 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 Xalles Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xalles Holdings has no effect on the direction of Appen i.e., Appen and Xalles Holdings go up and down completely randomly.

Pair Corralation between Appen and Xalles Holdings

Assuming the 90 days horizon Appen Limited is expected to under-perform the Xalles Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Appen Limited is 2.07 times less risky than Xalles Holdings. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Xalles Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Xalles Holdings on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Xalles Holdings or generate 0.0% return on investment over 90 days.

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

Appen Limited  vs.  Xalles Holdings

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.

Xalles Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xalles Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent essential indicators, Xalles Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appen and Xalles Holdings

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

The idea behind Appen Limited and Xalles Holdings 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.