Correlation Between Appian Corp and Intuitive Machines

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

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

Diversification Opportunities for Appian Corp and Intuitive Machines

0.68

Correlation Coefficient

Appian Corp  Intuitive Machines

Poor diversification

The 3 months correlation between Appian and Intuitive is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Appian Corp and Intuitive Machines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Machines and Appian 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 Appian Corp are associated (or correlated) with Intuitive Machines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Machines has no effect on the direction of Appian Corp i.e., Appian Corp and Intuitive Machines go up and down completely randomly.

Pair Corralation between Appian Corp and Intuitive Machines

Given the investment horizon of 90 days Appian Corp is expected to generate 5.34 times less return on investment than Intuitive Machines. But when comparing it to its historical volatility, Appian Corp is 2.49 times less risky than Intuitive Machines. It trades about 0.05 of its potential returns per unit of risk. Intuitive Machines is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,168  in Intuitive Machines on September 17, 2024 and sell it today you would earn a total of  125.00  from holding Intuitive Machines or generate 10.7% return on investment over 90 days.

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

Appian Corp  vs.  Intuitive Machines

Appian Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Appian Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Appian Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Intuitive Machines

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appian Corp and Intuitive Machines

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

The idea behind Appian Corp and Intuitive Machines 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.