Correlation Between Globant SA and Appen

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

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

Diversification Opportunities for Globant SA and Appen

0.4

Correlation Coefficient

Globant SA  Appen

Very weak diversification

The 3 months correlation between Globant and Appen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Globant SA and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited and Globant SA 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 Globant SA 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 Globant SA i.e., Globant SA and Appen go up and down completely randomly.

Pair Corralation between Globant SA and Appen

Given the investment horizon of 90 days Globant SA is expected to generate 9.09 times less return on investment than Appen. But when comparing it to its historical volatility, Globant SA is 5.42 times less risky than Appen. It trades about 0.07 of its potential returns per unit of risk. Appen Limited is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  82.00  in Appen Limited on September 14, 2024 and sell it today you would earn a total of  68.00  from holding Appen Limited or generate 82.93% return on investment over 90 days.

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

Globant SA  vs.  Appen Limited

Globant SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globant SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Globant SA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Appen Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Appen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globant SA and Appen

The main advantage of trading using opposite Globant SA and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globant SA 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 Globant SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.