Correlation Between S A P and VSBLTY Groupe

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

Diversification Opportunities for S A P and VSBLTY Groupe

-0.08

Correlation Coefficient

S A P  VSBLTY Groupe

Good diversification

The 3 months correlation between SAP and VSBLTY is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and VSBLTY Groupe Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VSBLTY Groupe Techno 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 VSBLTY Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VSBLTY Groupe Techno has no effect on the direction of S A P i.e., S A P and VSBLTY Groupe go up and down completely randomly.

Pair Corralation between S A P and VSBLTY Groupe

Considering the 90-day investment horizon SAP SE ADR is expected to generate 0.12 times more return on investment than VSBLTY Groupe. However, SAP SE ADR is 8.62 times less risky than VSBLTY Groupe. It trades about 0.12 of its potential returns per unit of risk. VSBLTY Groupe Technologies is currently generating about 0.0 per unit of risk. If you would invest  10,658  in SAP SE ADR on September 4, 2024 and sell it today you would earn a total of  13,501  from holding SAP SE ADR or generate 126.67% return on investment over 90 days.

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

SAP SE ADR  vs.  VSBLTY Groupe Technologies

SAP SE ADR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE ADR are ranked lower than 10 (%) 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 January 2025.

VSBLTY Groupe Techno

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with S A P and VSBLTY Groupe

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

The idea behind SAP SE ADR and VSBLTY Groupe Technologies 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.