Correlation Between S A P and Metro AG
Can any of the company-specific risk be diversified away by investing in both S A P and Metro AG 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 Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and Metro AG, you can compare the effects of market volatilities on S A P and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Metro AG.
Diversification Opportunities for S A P and Metro AG
Pay attention - limited upside
The 3 months correlation between SAP and Metro is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of S A P i.e., S A P and Metro AG go up and down completely randomly.
Pair Corralation between S A P and Metro AG
Assuming the 90 days trading horizon SAP SE is expected to generate 0.59 times more return on investment than Metro AG. However, SAP SE is 1.68 times less risky than Metro AG. It trades about 0.35 of its potential returns per unit of risk. Metro AG is currently generating about -0.26 per unit of risk. If you would invest 21,860 in SAP SE on September 19, 2024 and sell it today you would earn a total of 2,170 from holding SAP SE or generate 9.93% 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. Metro AG
Performance |
| Timeline |
| SAP SE |
| Metro AG |
S A P and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Metro AG
The main advantage of trading using opposite S A P and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| S A P vs. Superior Plus Corp | S A P vs. SIVERS SEMICONDUCTORS AB | S A P vs. Norsk Hydro ASA | S A P vs. Reliance Steel Aluminum |
| Metro AG vs. MOVIE GAMES SA | Metro AG vs. NXP Semiconductors NV | Metro AG vs. GEAR4MUSIC LS 10 | Metro AG vs. TOREX SEMICONDUCTOR LTD |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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