Correlation Between Grupo Carso and SAP SE

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

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

Diversification Opportunities for Grupo Carso and SAP SE

-0.37

Correlation Coefficient

Grupo Carso  SAP SE

Very good diversification

The 3 months correlation between Grupo and SAP is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Carso SAB and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Grupo Carso 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 Grupo Carso SAB are associated (or correlated) with SAP SE. 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 Grupo Carso i.e., Grupo Carso and SAP SE go up and down completely randomly.

Pair Corralation between Grupo Carso and SAP SE

Assuming the 90 days trading horizon Grupo Carso SAB is expected to under-perform the SAP SE. In addition to that, Grupo Carso is 1.43 times more volatile than SAP SE. It trades about -0.07 of its total potential returns per unit of risk. SAP SE is currently generating about 0.25 per unit of volatility. If you would invest  424,000  in SAP SE on October 14, 2024 and sell it today you would earn a total of  92,151  from holding SAP SE or generate 21.73% return on investment over 90 days.

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

Grupo Carso SAB  vs.  SAP SE

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SAP SE

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SAP SE showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Carso and SAP SE

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

The idea behind Grupo Carso SAB 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.