Correlation Between Identiv and S A P

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

Diversification Opportunities for Identiv and S A P

0.88

Correlation Coefficient

Identiv  S A P

Very poor diversification

The 3 months correlation between Identiv and SAP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Identiv 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 Identiv 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 Identiv i.e., Identiv and S A P go up and down completely randomly.

Pair Corralation between Identiv and S A P

Assuming the 90 days trading horizon Identiv is expected to generate 2.67 times more return on investment than S A P. However, Identiv is 2.67 times more volatile than SAP SE. It trades about 0.18 of its potential returns per unit of risk. SAP SE is currently generating about 0.18 per unit of risk. If you would invest  320.00  in Identiv on September 1, 2024 and sell it today you would earn a total of  40.00  from holding Identiv or generate 12.5% return on investment over 90 days.

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

Identiv  vs.  SAP SE

Identiv

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

SAP SE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Identiv and S A P

The main advantage of trading using opposite Identiv and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Identiv 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 Identiv 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.