Correlation Between Globex Mining and S A P

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Can any of the company-specific risk be diversified away by investing in both Globex Mining and S A P 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 Globex Mining and S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and SAP SE, you can compare the effects of market volatilities on Globex Mining and S A P 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 Globex Mining with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and S A P.

Diversification Opportunities for Globex Mining and S A P

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Globex and SAP is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Globex Mining i.e., Globex Mining and S A P go up and down completely randomly.

Pair Corralation between Globex Mining and S A P

Assuming the 90 days trading horizon Globex Mining Enterprises is expected to under-perform the S A P. In addition to that, Globex Mining is 1.1 times more volatile than SAP SE. It trades about -0.07 of its total potential returns per unit of risk. SAP SE is currently generating about 0.14 per unit of volatility. If you would invest  22,398  in SAP SE on April 17, 2025 and sell it today you would earn a total of  3,582  from holding SAP SE or generate 15.99% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Globex Mining Enterprises  vs.  SAP SE

 Performance 
       Timeline  
Globex Mining Enterprises 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Globex Mining Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
SAP SE 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, S A P unveiled solid returns over the last few months and may actually be approaching a breakup point.

Globex Mining and S A P Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Globex Mining and S A P

The main advantage of trading using opposite Globex Mining and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.
The idea behind Globex Mining Enterprises and SAP SE 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.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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