Correlation Between Ebro Foods and S A P

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

Diversification Opportunities for Ebro Foods and S A P

0.57

Correlation Coefficient

Ebro Foods  S A P

Very weak diversification

The 3 months correlation between Ebro and SAP is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ebro Foods SA and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Ebro Foods 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 Ebro Foods 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 Ebro Foods i.e., Ebro Foods and S A P go up and down completely randomly.

Pair Corralation between Ebro Foods and S A P

Assuming the 90 days horizon Ebro Foods SA is expected to generate 0.63 times more return on investment than S A P. However, Ebro Foods SA is 1.59 times less risky than S A P. It trades about 0.1 of its potential returns per unit of risk. SAP SE is currently generating about 0.05 per unit of risk. If you would invest  1,568  in Ebro Foods SA on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Ebro Foods SA or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Ebro Foods SA  vs.  SAP SE

Ebro Foods SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ebro Foods SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ebro Foods may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SAP SE

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 4 (%) 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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ebro Foods and S A P

The main advantage of trading using opposite Ebro Foods and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebro Foods 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 Ebro Foods 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.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.