Correlation Between Laureate Education and S A P
Can any of the company-specific risk be diversified away by investing in both Laureate Education 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 Laureate Education 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 Laureate Education and SAP SE, you can compare the effects of market volatilities on Laureate Education 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 Laureate Education with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laureate Education and S A P.
Diversification Opportunities for Laureate Education and S A P
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Laureate and SAP is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Laureate Education and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Laureate Education 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 Laureate Education 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 Laureate Education i.e., Laureate Education and S A P go up and down completely randomly.
Pair Corralation between Laureate Education and S A P
Assuming the 90 days trading horizon Laureate Education is expected to generate 1.19 times less return on investment than S A P. In addition to that, Laureate Education is 1.53 times more volatile than SAP SE. It trades about 0.08 of its total potential returns per unit of risk. SAP SE is currently generating about 0.14 per unit of volatility. If you would invest 9,477 in SAP SE on September 12, 2024 and sell it today you would earn a total of 14,528 from holding SAP SE or generate 153.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Laureate Education vs. SAP SE
Performance |
| Timeline |
| Laureate Education |
| SAP SE |
Laureate Education and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Laureate Education and S A P
The main advantage of trading using opposite Laureate Education and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laureate Education 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.| Laureate Education vs. AWILCO DRILLING PLC | Laureate Education vs. EHEALTH | Laureate Education vs. National Health Investors | Laureate Education vs. STRAYER EDUCATION |
| S A P vs. INSURANCE AUST GRP | S A P vs. Direct Line Insurance | S A P vs. Samsung Electronics Co | S A P vs. AOI Electronics Co |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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