Correlation Between S A P and Coinsilium Group

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

Diversification Opportunities for S A P and Coinsilium Group

-0.51

Correlation Coefficient

S A P  Coinsilium Group

Excellent diversification

The 3 months correlation between SAP and Coinsilium is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Coinsilium Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coinsilium Group 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 Coinsilium Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coinsilium Group has no effect on the direction of S A P i.e., S A P and Coinsilium Group go up and down completely randomly.

Pair Corralation between S A P and Coinsilium Group

Considering the 90-day investment horizon S A P is expected to generate 6.27 times less return on investment than Coinsilium Group. But when comparing it to its historical volatility, SAP SE ADR is 13.34 times less risky than Coinsilium Group. It trades about 0.16 of its potential returns per unit of risk. Coinsilium Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4.75  in Coinsilium Group on December 2, 2024 and sell it today you would lose (0.65) from holding Coinsilium Group or give up 13.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SAP SE ADR  vs.  Coinsilium Group

SAP SE ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE ADR are ranked lower than 12 (%) 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.

Coinsilium Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Coinsilium Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Coinsilium Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with S A P and Coinsilium Group

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

The idea behind SAP SE ADR and Coinsilium Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.