Correlation Between Neinor Homes and S A P

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

By analyzing existing cross correlation between Neinor Homes SA and SAP SE, you can compare the effects of market volatilities on Neinor Homes and S A P 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 Neinor Homes with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neinor Homes and S A P.

Diversification Opportunities for Neinor Homes and S A P

0.39

Correlation Coefficient

Neinor Homes  S A P

Weak diversification

The 3 months correlation between Neinor and SAP is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Neinor Homes SA and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Neinor Homes 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 Neinor Homes SA are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Neinor Homes i.e., Neinor Homes and S A P go up and down completely randomly.

Pair Corralation between Neinor Homes and S A P

Assuming the 90 days trading horizon Neinor Homes SA is expected to under-perform the S A P. In addition to that, Neinor Homes is 1.32 times more volatile than SAP SE. It trades about -0.04 of its total potential returns per unit of risk. SAP SE is currently generating about 0.05 per unit of volatility. If you would invest  23,630  in SAP SE on December 30, 2024 and sell it today you would earn a total of  1,045  from holding SAP SE or generate 4.42% return on investment over 90 days.

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

Neinor Homes SA  vs.  SAP SE

Neinor Homes SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neinor Homes SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Neinor Homes is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SAP SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, S A P is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Neinor Homes and S A P

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

The idea behind Neinor Homes SA and SAP SE 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.