Correlation Between S A P and Liquid Avatar
Can any of the company-specific risk be diversified away by investing in both S A P and Liquid Avatar 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 Liquid Avatar 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 Liquid Avatar Technologies, you can compare the effects of market volatilities on S A P and Liquid Avatar 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 Liquid Avatar. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Liquid Avatar.
Diversification Opportunities for S A P and Liquid Avatar
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SAP and Liquid is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Liquid Avatar Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liquid Avatar Techno 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 Liquid Avatar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liquid Avatar Techno has no effect on the direction of S A P i.e., S A P and Liquid Avatar go up and down completely randomly.
Pair Corralation between S A P and Liquid Avatar
Considering the 90-day investment horizon SAP SE ADR is expected to generate 0.11 times more return on investment than Liquid Avatar. However, SAP SE ADR is 8.93 times less risky than Liquid Avatar. It trades about 0.14 of its potential returns per unit of risk. Liquid Avatar Technologies is currently generating about -0.13 per unit of risk. If you would invest 21,543 in SAP SE ADR on September 4, 2024 and sell it today you would earn a total of 2,847 from holding SAP SE ADR or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
SAP SE ADR vs. Liquid Avatar Technologies
Performance |
| Timeline |
| SAP SE ADR |
| Liquid Avatar Techno |
S A P and Liquid Avatar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Liquid Avatar
The main advantage of trading using opposite S A P and Liquid Avatar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Liquid Avatar 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 Liquid Avatar will offset losses from the drop in Liquid Avatar'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 |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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