Correlation Between S A P and INSURANCE AUST
Can any of the company-specific risk be diversified away by investing in both S A P and INSURANCE AUST 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 INSURANCE AUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and INSURANCE AUST GRP, you can compare the effects of market volatilities on S A P and INSURANCE AUST 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 INSURANCE AUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and INSURANCE AUST.
Diversification Opportunities for S A P and INSURANCE AUST
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SAP and INSURANCE is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of S A P i.e., S A P and INSURANCE AUST go up and down completely randomly.
Pair Corralation between S A P and INSURANCE AUST
Assuming the 90 days trading horizon SAP SE is expected to generate 0.93 times more return on investment than INSURANCE AUST. However, SAP SE is 1.07 times less risky than INSURANCE AUST. It trades about 0.15 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about 0.1 per unit of risk. If you would invest 12,342 in SAP SE on September 12, 2024 and sell it today you would earn a total of 11,663 from holding SAP SE or generate 94.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE vs. INSURANCE AUST GRP
Performance |
| Timeline |
| SAP SE |
| INSURANCE AUST GRP |
S A P and INSURANCE AUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and INSURANCE AUST
The main advantage of trading using opposite S A P and INSURANCE AUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, INSURANCE AUST 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 INSURANCE AUST will offset losses from the drop in INSURANCE AUST's long position.| S A P vs. INSURANCE AUST GRP | S A P vs. Direct Line Insurance | S A P vs. Samsung Electronics Co | S A P vs. AOI Electronics Co |
| INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc | INSURANCE AUST vs. Apple Inc |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |