Correlation Between Apple and S A P
Can any of the company-specific risk be diversified away by investing in both Apple 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 Apple 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 Apple Inc and SAP SE, you can compare the effects of market volatilities on Apple 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 Apple with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and S A P.
Diversification Opportunities for Apple and S A P
Very poor diversification
The 3 months correlation between Apple and SAP is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Apple 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 Apple Inc 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 SAP SE has no effect on the direction of Apple i.e., Apple and S A P go up and down completely randomly.
Pair Corralation between Apple and S A P
Assuming the 90 days trading horizon Apple is expected to generate 1.2 times less return on investment than S A P. In addition to that, Apple is 1.09 times more volatile than SAP SE. It trades about 0.09 of its total potential returns per unit of risk. SAP SE is currently generating about 0.12 per unit of volatility. If you would invest 16,019 in SAP SE on August 29, 2024 and sell it today you would earn a total of 6,386 from holding SAP SE or generate 39.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc vs. SAP SE
Performance |
| Timeline |
| Apple Inc |
| SAP SE |
Apple and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and S A P
The main advantage of trading using opposite Apple and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple 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.| Apple vs. MAVEN WIRELESS SWEDEN | Apple vs. MOVIE GAMES SA | Apple vs. OFFICE DEPOT | Apple vs. AGRICULTBK HADR25 YC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |