Correlation Between SAP SE and EBRO FOODS
Can any of the company-specific risk be diversified away by investing in both SAP SE and EBRO FOODS 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 SAP SE and EBRO FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and EBRO FOODS, you can compare the effects of market volatilities on SAP SE and EBRO FOODS 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 SAP SE with a short position of EBRO FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAP SE and EBRO FOODS.
Diversification Opportunities for SAP SE and EBRO FOODS
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SAP and EBRO is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and EBRO FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EBRO FOODS and SAP SE 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 EBRO FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EBRO FOODS has no effect on the direction of SAP SE i.e., SAP SE and EBRO FOODS go up and down completely randomly.
Pair Corralation between SAP SE and EBRO FOODS
Assuming the 90 days trading horizon SAP SE is expected to generate 1.63 times more return on investment than EBRO FOODS. However, SAP SE is 1.63 times more volatile than EBRO FOODS. It trades about 0.18 of its potential returns per unit of risk. EBRO FOODS is currently generating about -0.16 per unit of risk. If you would invest 21,400 in SAP SE on September 5, 2024 and sell it today you would earn a total of 1,200 from holding SAP SE or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SAP SE vs. EBRO FOODS
Performance |
| Timeline |
| SAP SE |
| EBRO FOODS |
SAP SE and EBRO FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAP SE and EBRO FOODS
The main advantage of trading using opposite SAP SE and EBRO FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAP SE position performs unexpectedly, EBRO FOODS 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 EBRO FOODS will offset losses from the drop in EBRO FOODS's long position.| SAP SE vs. EBRO FOODS | SAP SE vs. Gol Intelligent Airlines | SAP SE vs. Lifeway Foods | SAP SE vs. American Airlines Group |
| EBRO FOODS vs. TOTAL GABON | EBRO FOODS vs. Walgreens Boots Alliance | EBRO FOODS vs. Peak Resources Limited |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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