Correlation Between Kontrol Technologies and Appen

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

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

Diversification Opportunities for Kontrol Technologies and Appen

-0.23

Correlation Coefficient

Kontrol Technologies  Appen

Very good diversification

The 3 months correlation between Kontrol and Appen is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Kontrol Technologies Corp and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited and Kontrol Technologies 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 Kontrol Technologies Corp 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 Kontrol Technologies i.e., Kontrol Technologies and Appen go up and down completely randomly.

Pair Corralation between Kontrol Technologies and Appen

Assuming the 90 days horizon Kontrol Technologies is expected to generate 13.9 times less return on investment than Appen. But when comparing it to its historical volatility, Kontrol Technologies Corp is 1.11 times less risky than Appen. It trades about 0.02 of its potential returns per unit of risk. Appen Limited is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  155.00  in Appen Limited on December 3, 2024 and sell it today you would earn a total of  29.00  from holding Appen Limited or generate 18.71% return on investment over 90 days.

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

Kontrol Technologies Corp  vs.  Appen Limited

Kontrol Technologies Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kontrol Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Kontrol Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Appen Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appen Limited are ranked lower than 7 (%) 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 Kontrol Technologies and Appen

The main advantage of trading using opposite Kontrol Technologies and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kontrol Technologies 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 Kontrol Technologies Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.