Correlation Between Sabvest Capital and S A P

Can any of the company-specific risk be diversified away by investing in both Sabvest Capital and S A P 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 Sabvest Capital and S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sabvest Capital and Sappi, you can compare the effects of market volatilities on Sabvest Capital and S A P 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 Sabvest Capital with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabvest Capital and S A P.

Diversification Opportunities for Sabvest Capital and S A P

0.64

Correlation Coefficient

Sabvest Capital  S A P

Poor diversification

The 3 months correlation between Sabvest and SAP is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sabvest Capital and Sappi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sappi and Sabvest Capital 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 Sabvest Capital are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sappi has no effect on the direction of Sabvest Capital i.e., Sabvest Capital and S A P go up and down completely randomly.

Pair Corralation between Sabvest Capital and S A P

Assuming the 90 days trading horizon Sabvest Capital is expected to generate 0.93 times more return on investment than S A P. However, Sabvest Capital is 1.07 times less risky than S A P. It trades about 0.0 of its potential returns per unit of risk. Sappi is currently generating about -0.11 per unit of risk. If you would invest  912,400  in Sabvest Capital on December 21, 2024 and sell it today you would lose (6,400) from holding Sabvest Capital or give up 0.7% of portfolio value over 90 days.

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

Sabvest Capital  vs.  Sappi

Sabvest Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sabvest Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Sabvest Capital is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Sappi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sappi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Sabvest Capital and S A P

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

The idea behind Sabvest Capital and Sappi 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.