Correlation Between S A P and Wishpond Technologies
Can any of the company-specific risk be diversified away by investing in both S A P and Wishpond Technologies 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 Wishpond Technologies 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 Wishpond Technologies, you can compare the effects of market volatilities on S A P and Wishpond Technologies 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 Wishpond Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Wishpond Technologies.
Diversification Opportunities for S A P and Wishpond Technologies
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SAP and Wishpond is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Wishpond Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wishpond Technologies 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 Wishpond Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wishpond Technologies has no effect on the direction of S A P i.e., S A P and Wishpond Technologies go up and down completely randomly.
Pair Corralation between S A P and Wishpond Technologies
Considering the 90-day investment horizon SAP SE ADR is expected to generate 0.3 times more return on investment than Wishpond Technologies. However, SAP SE ADR is 3.33 times less risky than Wishpond Technologies. It trades about 0.09 of its potential returns per unit of risk. Wishpond Technologies is currently generating about -0.12 per unit of risk. If you would invest 21,693 in SAP SE ADR on August 28, 2024 and sell it today you would earn a total of 1,688 from holding SAP SE ADR or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
SAP SE ADR vs. Wishpond Technologies
Performance |
| Timeline |
| SAP SE ADR |
| Wishpond Technologies |
S A P and Wishpond Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S A P and Wishpond Technologies
The main advantage of trading using opposite S A P and Wishpond Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Wishpond Technologies 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 Wishpond Technologies will offset losses from the drop in Wishpond Technologies' long position.The idea behind SAP SE ADR and Wishpond Technologies 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.| Wishpond Technologies vs. Salesforce | Wishpond Technologies vs. SAP SE ADR | Wishpond Technologies vs. ServiceNow | Wishpond Technologies vs. Intuit 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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