Correlation Between Appswarm and EGain

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

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

Diversification Opportunities for Appswarm and EGain

-0.12

Correlation Coefficient

Appswarm  EGain

Good diversification

The 3 months correlation between Appswarm and EGain is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Appswarm and eGain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGain and Appswarm 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 Appswarm are associated (or correlated) with EGain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eGain has no effect on the direction of Appswarm i.e., Appswarm and EGain go up and down completely randomly.

Pair Corralation between Appswarm and EGain

Given the investment horizon of 90 days Appswarm is expected to generate 3.45 times more return on investment than EGain. However, Appswarm is 3.45 times more volatile than eGain. It trades about 0.02 of its potential returns per unit of risk. eGain is currently generating about -0.03 per unit of risk. If you would invest  0.03  in Appswarm on September 4, 2024 and sell it today you would lose (0.01) from holding Appswarm or give up 33.33% of portfolio value over 90 days.

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

Appswarm  vs.  eGain

Appswarm

Risk-Adjusted Performance

1 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appswarm are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Appswarm displayed solid returns over the last few months and may actually be approaching a breakup point.

eGain

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days eGain has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Appswarm and EGain

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

The idea behind Appswarm and eGain 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.