Correlation Between Mdica Sur and SAP SE

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

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

Diversification Opportunities for Mdica Sur and SAP SE

0.77

Correlation Coefficient

Mdica Sur  SAP SE

Poor diversification

The 3 months correlation between Mdica and SAP is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mdica Sur SAB and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Mdica Sur 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 Mdica Sur 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 Mdica Sur i.e., Mdica Sur and SAP SE go up and down completely randomly.

Pair Corralation between Mdica Sur and SAP SE

Assuming the 90 days trading horizon Mdica Sur SAB is expected to generate 1.32 times more return on investment than SAP SE. However, Mdica Sur is 1.32 times more volatile than SAP SE. It trades about 0.26 of its potential returns per unit of risk. SAP SE is currently generating about 0.21 per unit of risk. If you would invest  3,200  in Mdica Sur SAB on September 25, 2024 and sell it today you would earn a total of  223.00  from holding Mdica Sur SAB or generate 6.97% return on investment over 90 days.

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

Mdica Sur SAB  vs.  SAP SE

Mdica Sur SAB

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mdica Sur SAB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Mdica Sur sustained 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 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 Mdica Sur and SAP SE

The main advantage of trading using opposite Mdica Sur and SAP SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mdica Sur 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 Mdica Sur 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.