Correlation Between S A P and Epazz
Can any of the company-specific risk be diversified away by investing in both S A P and Epazz 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 Epazz 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 Epazz Inc, you can compare the effects of market volatilities on S A P and Epazz 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 Epazz. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Epazz.
Diversification Opportunities for S A P and Epazz
Good diversification
The 3 months correlation between SAP and Epazz is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Epazz Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epazz 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 Epazz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epazz Inc has no effect on the direction of S A P i.e., S A P and Epazz go up and down completely randomly.
Pair Corralation between S A P and Epazz
Considering the 90-day investment horizon S A P is expected to generate 5.64 times less return on investment than Epazz. But when comparing it to its historical volatility, SAP SE ADR is 10.54 times less risky than Epazz. It trades about 0.09 of its potential returns per unit of risk. Epazz Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 0.05 in Epazz Inc on August 31, 2024 and sell it today you would lose (0.01) from holding Epazz Inc or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE ADR vs. Epazz Inc
Performance |
| Timeline |
| SAP SE ADR |
| Epazz Inc |
S A P and Epazz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Epazz
The main advantage of trading using opposite S A P and Epazz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Epazz 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 Epazz will offset losses from the drop in Epazz's long position.| S A P vs. Tyler Technologies | S A P vs. Roper Technologies, Common | S A P vs. Cadence Design Systems | S A P vs. PTC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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