Correlation Between Excel Corp and Appian Corp

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

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

Diversification Opportunities for Excel Corp and Appian Corp

0.03

Correlation Coefficient

Excel Corp  Appian Corp

Significant diversification

The 3 months correlation between Excel and Appian is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Excel Corp and Appian Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appian Corp and Excel Corp 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 Excel Corp are associated (or correlated) with Appian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appian Corp has no effect on the direction of Excel Corp i.e., Excel Corp and Appian Corp go up and down completely randomly.

Pair Corralation between Excel Corp and Appian Corp

Given the investment horizon of 90 days Excel Corp is expected to under-perform the Appian Corp. In addition to that, Excel Corp is 3.55 times more volatile than Appian Corp. It trades about -0.13 of its total potential returns per unit of risk. Appian Corp is currently generating about 0.06 per unit of volatility. If you would invest  3,371  in Appian Corp on January 26, 2024 and sell it today you would earn a total of  295.00  from holding Appian Corp or generate 8.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Excel Corp  vs.  Appian Corp

Excel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Excel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Appian Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Appian Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Appian Corp may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with Excel Corp and Appian Corp

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

The idea behind Excel Corp and Appian Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.