Correlation Between SAP SE and Axihub

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

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

Diversification Opportunities for SAP SE and Axihub

-0.47

Correlation Coefficient

SAP SE  Axihub

Very good diversification

The 3 months correlation between SAP and Axihub is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Axihub Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axihub Inc and SAP SE 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 are associated (or correlated) with Axihub. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axihub Inc has no effect on the direction of SAP SE i.e., SAP SE and Axihub go up and down completely randomly.

Pair Corralation between SAP SE and Axihub

Assuming the 90 days horizon SAP SE is expected to generate 3.06 times less return on investment than Axihub. But when comparing it to its historical volatility, SAP SE is 9.86 times less risky than Axihub. It trades about 0.12 of its potential returns per unit of risk. Axihub Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.08  in Axihub Inc on September 14, 2024 and sell it today you would lose (0.05) from holding Axihub Inc or give up 62.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	29.12%
Values	Daily Returns

SAP SE  vs.  Axihub Inc

SAP SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, SAP SE reported solid returns over the last few months and may actually be approaching a breakup point.

Axihub Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axihub Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Axihub is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with SAP SE and Axihub

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

The idea behind SAP SE and Axihub Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..