Correlation Between S A P and Altia Oyj
Can any of the company-specific risk be diversified away by investing in both S A P and Altia Oyj 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 S A P and Altia Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and Altia Oyj, you can compare the effects of market volatilities on S A P and Altia Oyj 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 S A P with a short position of Altia Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Altia Oyj.
Diversification Opportunities for S A P and Altia Oyj
Pay attention - limited upside
The 3 months correlation between SAP and Altia is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Altia Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altia Oyj and S A P 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 SAP SE are associated (or correlated) with Altia Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altia Oyj has no effect on the direction of S A P i.e., S A P and Altia Oyj go up and down completely randomly.
Pair Corralation between S A P and Altia Oyj
Assuming the 90 days trading horizon SAP SE is expected to generate 0.89 times more return on investment than Altia Oyj. However, SAP SE is 1.12 times less risky than Altia Oyj. It trades about 0.1 of its potential returns per unit of risk. Altia Oyj is currently generating about -0.52 per unit of risk. If you would invest 21,975 in SAP SE on August 25, 2024 and sell it today you would earn a total of 640.00 from holding SAP SE or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE vs. Altia Oyj
Performance |
| Timeline |
| SAP SE |
| Altia Oyj |
S A P and Altia Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Altia Oyj
The main advantage of trading using opposite S A P and Altia Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Altia Oyj 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 Altia Oyj will offset losses from the drop in Altia Oyj's long position.| S A P vs. QUEEN S ROAD | S A P vs. TEXAS ROADHOUSE | S A P vs. INSURANCE AUST GRP | S A P vs. BROADSTNET LEADL 00025 |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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