Correlation Between S A P and Agent Information

Can any of the company-specific risk be diversified away by investing in both S A P and Agent Information 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 S A P and Agent Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SAP SE ADR and Agent Information Software, you can compare the effects of market volatilities on S A P and Agent Information 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 S A P with a short position of Agent Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Agent Information.

Diversification Opportunities for S A P and Agent Information

0.72

Correlation Coefficient

S A P  Agent Information

Poor diversification

The 3 months correlation between SAP and Agent is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Agent Information Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agent Information and S A P 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 SAP SE ADR are associated (or correlated) with Agent Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agent Information has no effect on the direction of S A P i.e., S A P and Agent Information go up and down completely randomly.

Pair Corralation between S A P and Agent Information

Considering the 90-day investment horizon S A P is expected to generate 3.02 times less return on investment than Agent Information. But when comparing it to its historical volatility, SAP SE ADR is 5.99 times less risky than Agent Information. It trades about 0.27 of its potential returns per unit of risk. Agent Information Software is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  130.00  in Agent Information Software on September 13, 2024 and sell it today you would earn a total of  24.00  from holding Agent Information Software or generate 18.46% return on investment over 90 days.

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

SAP SE ADR  vs.  Agent Information Software

SAP SE ADR

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, S A P reported solid returns over the last few months and may actually be approaching a breakup point.

Agent Information

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agent Information Software are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Agent Information unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with S A P and Agent Information

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

The idea behind SAP SE ADR and Agent Information Software 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.