Correlation Between S A P and Silvercorp Metals
Can any of the company-specific risk be diversified away by investing in both S A P and Silvercorp Metals 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 Silvercorp Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and Silvercorp Metals, you can compare the effects of market volatilities on S A P and Silvercorp Metals 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 Silvercorp Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Silvercorp Metals.
Diversification Opportunities for S A P and Silvercorp Metals
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SAP and Silvercorp is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Silvercorp Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silvercorp Metals 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 Silvercorp Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silvercorp Metals has no effect on the direction of S A P i.e., S A P and Silvercorp Metals go up and down completely randomly.
Pair Corralation between S A P and Silvercorp Metals
Assuming the 90 days trading horizon SAP SE is expected to generate 0.34 times more return on investment than Silvercorp Metals. However, SAP SE is 2.93 times less risky than Silvercorp Metals. It trades about 0.18 of its potential returns per unit of risk. Silvercorp Metals is currently generating about -0.25 per unit of risk. If you would invest 21,525 in SAP SE on September 22, 2024 and sell it today you would earn a total of 2,150 from holding SAP SE or generate 9.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE vs. Silvercorp Metals
Performance |
| Timeline |
| SAP SE |
| Silvercorp Metals |
S A P and Silvercorp Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Silvercorp Metals
The main advantage of trading using opposite S A P and Silvercorp Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Silvercorp Metals 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 Silvercorp Metals will offset losses from the drop in Silvercorp Metals' long position.| S A P vs. The Hanover Insurance | S A P vs. Astral Foods Limited | S A P vs. Insurance Australia Group | S A P vs. TYSON FOODS A |
| Silvercorp Metals vs. Ares Management Corp | Silvercorp Metals vs. ALTAIR RES INC | Silvercorp Metals vs. Brockhaus Capital Management | Silvercorp Metals vs. Air New Zealand |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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