Correlation Between S A P and Trematon Capital
Can any of the company-specific risk be diversified away by investing in both S A P and Trematon Capital 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 Trematon Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sappi and Trematon Capital Investments, you can compare the effects of market volatilities on S A P and Trematon Capital 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 Trematon Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Trematon Capital.
Diversification Opportunities for S A P and Trematon Capital
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SAP and Trematon is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sappi and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Sappi are associated (or correlated) with Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of S A P i.e., S A P and Trematon Capital go up and down completely randomly.
Pair Corralation between S A P and Trematon Capital
Assuming the 90 days trading horizon Sappi is expected to generate 0.78 times more return on investment than Trematon Capital. However, Sappi is 1.27 times less risky than Trematon Capital. It trades about 0.11 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about -0.09 per unit of risk. If you would invest 476,600 in Sappi on September 1, 2024 and sell it today you would earn a total of 27,700 from holding Sappi or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Sappi vs. Trematon Capital Investments
Performance |
| Timeline |
| Sappi |
| Trematon Capital Inv |
S A P and Trematon Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Trematon Capital
The main advantage of trading using opposite S A P and Trematon Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Trematon Capital 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 Trematon Capital will offset losses from the drop in Trematon Capital's long position.| S A P vs. Sasol Ltd Bee | S A P vs. Growthpoint Properties | S A P vs. AfricaRhodium ETF | S A P vs. CoreShares Preference Share |
| Trematon Capital vs. Afine Investments | Trematon Capital vs. E Media Holdings | Trematon Capital vs. Master Drilling Group | Trematon Capital vs. African Media Entertainment |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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