Correlation Between ASGN and Appen

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

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

Diversification Opportunities for ASGN and Appen

-0.53

Correlation Coefficient

ASGN  Appen

Excellent diversification

The 3 months correlation between ASGN and Appen is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ASGN Inc and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited and ASGN 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 ASGN Inc are associated (or correlated) with Appen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appen Limited has no effect on the direction of ASGN i.e., ASGN and Appen go up and down completely randomly.

Pair Corralation between ASGN and Appen

Given the investment horizon of 90 days ASGN Inc is expected to under-perform the Appen. But the stock apears to be less risky and, when comparing its historical volatility, ASGN Inc is 4.59 times less risky than Appen. The stock trades about -0.22 of its potential returns per unit of risk. The Appen Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Appen Limited on November 28, 2024 and sell it today you would lose (13.00) from holding Appen Limited or give up 18.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

ASGN Inc  vs.  Appen Limited

ASGN Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days ASGN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Appen Limited

Risk-Adjusted Performance

Modest

Over the last 90 days Appen Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Appen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ASGN and Appen

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

The idea behind ASGN Inc and Appen Limited 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.