Correlation Between SERI INDUSTRIAL and S A P
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL 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 SERI INDUSTRIAL 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 SERI INDUSTRIAL EO and SAP SE, you can compare the effects of market volatilities on SERI INDUSTRIAL 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 SERI INDUSTRIAL with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and S A P.
Diversification Opportunities for SERI INDUSTRIAL and S A P
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SERI and SAP is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO 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 SERI INDUSTRIAL i.e., SERI INDUSTRIAL and S A P go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and S A P
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the S A P. In addition to that, SERI INDUSTRIAL is 2.72 times more volatile than SAP SE. It trades about -0.04 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 10,414 in SAP SE on October 12, 2024 and sell it today you would earn a total of 14,171 from holding SAP SE or generate 136.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. SAP SE
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| SAP SE |
SERI INDUSTRIAL and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and S A P
The main advantage of trading using opposite SERI INDUSTRIAL and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL 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.| SERI INDUSTRIAL vs. KIMBALL ELECTRONICS | SERI INDUSTRIAL vs. Renesas Electronics | SERI INDUSTRIAL vs. MINCO SILVER | SERI INDUSTRIAL vs. Aya Gold Silver |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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