Correlation Between S A P and TrustBIX

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

Diversification Opportunities for S A P and TrustBIX

-0.71

Correlation Coefficient

S A P  TrustBIX

Pay attention - limited upside

The 3 months correlation between SAP and TrustBIX is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and TrustBIX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TrustBIX 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 TrustBIX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TrustBIX has no effect on the direction of S A P i.e., S A P and TrustBIX go up and down completely randomly.

Pair Corralation between S A P and TrustBIX

Considering the 90-day investment horizon S A P is expected to generate 4.38 times less return on investment than TrustBIX. But when comparing it to its historical volatility, SAP SE ADR is 8.58 times less risky than TrustBIX. It trades about 0.07 of its potential returns per unit of risk. TrustBIX is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3.95  in TrustBIX on December 27, 2024 and sell it today you would lose (2.18) from holding TrustBIX or give up 55.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

SAP SE ADR  vs.  TrustBIX

SAP SE ADR

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in April 2025.

TrustBIX

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TrustBIX are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, TrustBIX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with S A P and TrustBIX

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

The idea behind SAP SE ADR and TrustBIX 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.