Correlation Between INSURANCE AUST and SAP SE
Can any of the company-specific risk be diversified away by investing in both INSURANCE AUST and SAP SE 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 INSURANCE AUST and SAP SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSURANCE AUST GRP and SAP SE, you can compare the effects of market volatilities on INSURANCE AUST and SAP SE 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 INSURANCE AUST with a short position of SAP SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSURANCE AUST and SAP SE.
Diversification Opportunities for INSURANCE AUST and SAP SE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INSURANCE and SAP is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding INSURANCE AUST GRP and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and INSURANCE AUST 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 INSURANCE AUST GRP are associated (or correlated) with SAP SE. 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 INSURANCE AUST i.e., INSURANCE AUST and SAP SE go up and down completely randomly.
Pair Corralation between INSURANCE AUST and SAP SE
Assuming the 90 days trading horizon INSURANCE AUST is expected to generate 1.05 times less return on investment than SAP SE. But when comparing it to its historical volatility, INSURANCE AUST GRP is 1.18 times less risky than SAP SE. It trades about 0.13 of its potential returns per unit of risk. SAP SE is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 14,301 in SAP SE on September 4, 2024 and sell it today you would earn a total of 8,299 from holding SAP SE or generate 58.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSURANCE AUST GRP vs. SAP SE
Performance |
| Timeline |
| INSURANCE AUST GRP |
| SAP SE |
INSURANCE AUST and SAP SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSURANCE AUST and SAP SE
The main advantage of trading using opposite INSURANCE AUST and SAP SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSURANCE AUST position performs unexpectedly, SAP SE 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 SAP SE will offset losses from the drop in SAP SE's long position.| INSURANCE AUST vs. Strategic Investments AS | INSURANCE AUST vs. American Eagle Outfitters | INSURANCE AUST vs. Virtus Investment Partners | INSURANCE AUST vs. Aegean Airlines SA |
| SAP SE vs. Microchip Technology Incorporated | SAP SE vs. RYU Apparel | SAP SE vs. DALATA HOTEL | SAP SE vs. Wyndham Hotels Resorts |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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