Correlation Between SAP SE and I-On Digital
Can any of the company-specific risk be diversified away by investing in both SAP SE and I-On Digital 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 I-On Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP SE and I On Digital Corp, you can compare the effects of market volatilities on SAP SE and I-On Digital 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 I-On Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAP SE and I-On Digital.
Diversification Opportunities for SAP SE and I-On Digital
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SAP and I-On is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and I On Digital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I On Digital 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 I-On Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I On Digital has no effect on the direction of SAP SE i.e., SAP SE and I-On Digital go up and down completely randomly.
Pair Corralation between SAP SE and I-On Digital
Assuming the 90 days horizon SAP SE is expected to generate 0.15 times more return on investment than I-On Digital. However, SAP SE is 6.79 times less risky than I-On Digital. It trades about 0.56 of its potential returns per unit of risk. I On Digital Corp is currently generating about -0.06 per unit of risk. If you would invest 24,274 in SAP SE on November 3, 2024 and sell it today you would earn a total of 3,651 from holding SAP SE or generate 15.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAP SE vs. I On Digital Corp
Performance |
| Timeline |
| SAP SE |
| I On Digital |
SAP SE and I-On Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAP SE and I-On Digital
The main advantage of trading using opposite SAP SE and I-On Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAP SE position performs unexpectedly, I-On Digital 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 I-On Digital will offset losses from the drop in I-On Digital's long position.| SAP SE vs. RenoWorks Software | SAP SE vs. 01 Communique Laboratory | SAP SE vs. Temenos Group AG | SAP SE vs. Xero Limited |
| I-On Digital vs. Tautachrome | I-On Digital vs. Dear Cashmere Holding | I-On Digital vs. Nukkleus | I-On Digital vs. Fernhill Corp |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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