Correlation Between Nagarro SE and Appen

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

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

Diversification Opportunities for Nagarro SE and Appen

0.51

Correlation Coefficient

Nagarro SE  Appen

Very weak diversification

The 3 months correlation between Nagarro and Appen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Nagarro SE and Appen Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen Limited and Nagarro SE 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 Nagarro SE 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 Nagarro SE i.e., Nagarro SE and Appen go up and down completely randomly.

Pair Corralation between Nagarro SE and Appen

Assuming the 90 days horizon Nagarro SE is expected to generate 0.48 times more return on investment than Appen. However, Nagarro SE is 2.1 times less risky than Appen. It trades about -0.08 of its potential returns per unit of risk. Appen Limited is currently generating about -0.11 per unit of risk. If you would invest  9,560  in Nagarro SE on September 13, 2024 and sell it today you would lose (522.00) from holding Nagarro SE or give up 5.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Nagarro SE  vs.  Appen Limited

Nagarro SE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nagarro SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nagarro SE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Appen Limited

Risk-Adjusted Performance

5 of 100

Modest

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.

Pair Trading with Nagarro SE and Appen

The main advantage of trading using opposite Nagarro SE and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nagarro SE 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 Nagarro SE 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.