Correlation Between SAP SE and Grupo Carso

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

By analyzing existing cross correlation between SAP SE and Grupo Carso SAB, you can compare the effects of market volatilities on SAP SE and Grupo Carso 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 Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAP SE and Grupo Carso.

Diversification Opportunities for SAP SE and Grupo Carso

-0.37

Correlation Coefficient

SAP SE  Grupo Carso

Very good diversification

The 3 months correlation between SAP and Grupo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB 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 Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of SAP SE i.e., SAP SE and Grupo Carso go up and down completely randomly.

Pair Corralation between SAP SE and Grupo Carso

Assuming the 90 days trading horizon SAP SE is expected to generate 0.44 times more return on investment than Grupo Carso. However, SAP SE is 2.27 times less risky than Grupo Carso. It trades about 0.23 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about -0.1 per unit of risk. If you would invest  500,000  in SAP SE on October 14, 2024 and sell it today you would earn a total of  16,151  from holding SAP SE or generate 3.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

SAP SE  vs.  Grupo Carso SAB

SAP SE

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, SAP SE showed solid returns over the last few months and may actually be approaching a breakup point.

Grupo Carso SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grupo Carso SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SAP SE and Grupo Carso

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

The idea behind SAP SE and Grupo Carso SAB 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.