Correlation Between Mitie Group and S A P
Can any of the company-specific risk be diversified away by investing in both Mitie Group 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 Mitie Group 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 Mitie Group PLC and SAP SE, you can compare the effects of market volatilities on Mitie Group 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 Mitie Group with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitie Group and S A P.
Diversification Opportunities for Mitie Group and S A P
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mitie and SAP is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mitie Group PLC and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Mitie Group 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 Mitie Group PLC 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 Mitie Group i.e., Mitie Group and S A P go up and down completely randomly.
Pair Corralation between Mitie Group and S A P
Assuming the 90 days horizon Mitie Group is expected to generate 2.43 times less return on investment than S A P. In addition to that, Mitie Group is 1.55 times more volatile than SAP SE. It trades about 0.03 of its total potential returns per unit of risk. SAP SE is currently generating about 0.13 per unit of volatility. If you would invest 14,449 in SAP SE on August 29, 2024 and sell it today you would earn a total of 7,956 from holding SAP SE or generate 55.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Mitie Group PLC vs. SAP SE
Performance |
| Timeline |
| Mitie Group PLC |
| SAP SE |
Mitie Group and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitie Group and S A P
The main advantage of trading using opposite Mitie Group and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitie Group 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.| Mitie Group vs. Singapore Telecommunications Limited | Mitie Group vs. WillScot Mobile Mini | Mitie Group vs. Cogent Communications Holdings | Mitie Group vs. Iridium Communications |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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