Correlation Between S A P and Rubis SCA
Can any of the company-specific risk be diversified away by investing in both S A P and Rubis SCA 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 Rubis SCA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and Rubis SCA, you can compare the effects of market volatilities on S A P and Rubis SCA 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 Rubis SCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Rubis SCA.
Diversification Opportunities for S A P and Rubis SCA
Very good diversification
The 3 months correlation between SAP and Rubis is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Rubis SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rubis SCA 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 Rubis SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rubis SCA has no effect on the direction of S A P i.e., S A P and Rubis SCA go up and down completely randomly.
Pair Corralation between S A P and Rubis SCA
Assuming the 90 days trading horizon S A P is expected to generate 1.41 times less return on investment than Rubis SCA. But when comparing it to its historical volatility, SAP SE is 1.05 times less risky than Rubis SCA. It trades about 0.19 of its potential returns per unit of risk. Rubis SCA is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,222 in Rubis SCA on October 1, 2024 and sell it today you would earn a total of 116.00 from holding Rubis SCA or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE vs. Rubis SCA
Performance |
| Timeline |
| SAP SE |
| Rubis SCA |
S A P and Rubis SCA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Rubis SCA
The main advantage of trading using opposite S A P and Rubis SCA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Rubis SCA 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 Rubis SCA will offset losses from the drop in Rubis SCA's long position.The idea behind SAP SE and Rubis SCA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Rubis SCA vs. United Breweries Co | Rubis SCA vs. Perdoceo Education | Rubis SCA vs. Molson Coors Beverage | Rubis SCA vs. Fevertree Drinks PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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