Correlation Between MENSCH UND and S A P

Can any of the company-specific risk be diversified away by investing in both MENSCH UND 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 MENSCH UND 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 MENSCH UND MASCHINE and SAP SE, you can compare the effects of market volatilities on MENSCH UND 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 MENSCH UND with a short position of S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of MENSCH UND and S A P.

Diversification Opportunities for MENSCH UND and S A P

0.84

Correlation Coefficient

MENSCH UND  S A P

Very poor diversification

The 3 months correlation between MENSCH and SAP is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MENSCH UND MASCHINE and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and MENSCH UND 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 MENSCH UND MASCHINE 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 MENSCH UND i.e., MENSCH UND and S A P go up and down completely randomly.

Pair Corralation between MENSCH UND and S A P

Assuming the 90 days trading horizon MENSCH UND is expected to generate 1.62 times less return on investment than S A P. But when comparing it to its historical volatility, MENSCH UND MASCHINE is 1.18 times less risky than S A P. It trades about 0.13 of its potential returns per unit of risk. SAP SE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  21,985  in SAP SE on April 21, 2025 and sell it today you would earn a total of  4,330  from holding SAP SE or generate 19.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

MENSCH UND MASCHINE  vs.  SAP SE

MENSCH UND MASCHINE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MENSCH UND MASCHINE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain primary indicators, MENSCH UND may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SAP SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, S A P reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MENSCH UND and S A P

The main advantage of trading using opposite MENSCH UND and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MENSCH UND 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 MENSCH UND MASCHINE 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.