Correlation Between Fastly and S A P

Can any of the company-specific risk be diversified away by investing in both Fastly 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 Fastly 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 Fastly Inc and SAP SE, you can compare the effects of market volatilities on Fastly 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 Fastly with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastly and S A P.

Diversification Opportunities for Fastly and S A P

0.1

Correlation Coefficient

Fastly  S A P

Average diversification

The 3 months correlation between Fastly and SAP is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Fastly Inc and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Fastly 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 Fastly Inc 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 Fastly i.e., Fastly and S A P go up and down completely randomly.

Pair Corralation between Fastly and S A P

Assuming the 90 days trading horizon Fastly Inc is expected to under-perform the S A P. In addition to that, Fastly is 2.67 times more volatile than SAP SE. It trades about -0.12 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Fastly Inc  vs.  SAP SE

Fastly Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fastly Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm 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 Fastly and S A P

The main advantage of trading using opposite Fastly and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fastly 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 Fastly Inc 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.