Correlation Between S A P and ANSYS
Can any of the company-specific risk be diversified away by investing in both S A P and ANSYS 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 ANSYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE ADR and ANSYS Inc, you can compare the effects of market volatilities on S A P and ANSYS 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 ANSYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and ANSYS.
Diversification Opportunities for S A P and ANSYS
Poor diversification
The 3 months correlation between SAP and ANSYS is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and ANSYS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANSYS Inc 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 ADR are associated (or correlated) with ANSYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANSYS Inc has no effect on the direction of S A P i.e., S A P and ANSYS go up and down completely randomly.
Pair Corralation between S A P and ANSYS
Considering the 90-day investment horizon S A P is expected to generate 10.37 times less return on investment than ANSYS. But when comparing it to its historical volatility, SAP SE ADR is 1.46 times less risky than ANSYS. It trades about 0.03 of its potential returns per unit of risk. ANSYS Inc is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 32,185 in ANSYS Inc on August 24, 2024 and sell it today you would earn a total of 2,709 from holding ANSYS Inc or generate 8.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE ADR vs. ANSYS Inc
Performance |
| Timeline |
| SAP SE ADR |
| ANSYS Inc |
S A P and ANSYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and ANSYS
The main advantage of trading using opposite S A P and ANSYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, ANSYS 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 ANSYS will offset losses from the drop in ANSYS's long position.The idea behind SAP SE ADR and ANSYS Inc 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.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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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