Correlation Between SAP SE and Dassault Systemes
Can any of the company-specific risk be diversified away by investing in both SAP SE and Dassault Systemes 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 Dassault Systemes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and Dassault Systemes SE, you can compare the effects of market volatilities on SAP SE and Dassault Systemes 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 Dassault Systemes. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAP SE and Dassault Systemes.
Diversification Opportunities for SAP SE and Dassault Systemes
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SAP and Dassault is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Dassault Systemes SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Systemes 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 Dassault Systemes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Systemes has no effect on the direction of SAP SE i.e., SAP SE and Dassault Systemes go up and down completely randomly.
Pair Corralation between SAP SE and Dassault Systemes
Assuming the 90 days horizon SAP SE is expected to generate 0.71 times more return on investment than Dassault Systemes. However, SAP SE is 1.4 times less risky than Dassault Systemes. It trades about 0.1 of its potential returns per unit of risk. Dassault Systemes SE is currently generating about 0.0 per unit of risk. If you would invest 10,700 in SAP SE on August 26, 2024 and sell it today you would earn a total of 12,805 from holding SAP SE or generate 119.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
SAP SE vs. Dassault Systemes SE
Performance |
| Timeline |
| SAP SE |
| Dassault Systemes |
SAP SE and Dassault Systemes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAP SE and Dassault Systemes
The main advantage of trading using opposite SAP SE and Dassault Systemes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAP SE position performs unexpectedly, Dassault Systemes 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 Dassault Systemes will offset losses from the drop in Dassault Systemes' long position.| SAP SE vs. RenoWorks Software | SAP SE vs. 01 Communique Laboratory | SAP SE vs. Temenos Group AG | SAP SE vs. Xero Limited |
| Dassault Systemes vs. Salesforce | Dassault Systemes vs. SAP SE ADR | Dassault Systemes vs. ServiceNow | Dassault Systemes 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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