Correlation Between SAP SE and Ross Stores

Can any of the company-specific risk be diversified away by investing in both SAP SE and Ross Stores 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 Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SAP SE and Ross Stores, you can compare the effects of market volatilities on SAP SE and Ross Stores 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 Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAP SE and Ross Stores.

Diversification Opportunities for SAP SE and Ross Stores

0.07

Correlation Coefficient

SAP SE  Ross Stores

Significant diversification

The 3 months correlation between SAP and Ross is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of SAP SE i.e., SAP SE and Ross Stores go up and down completely randomly.

Pair Corralation between SAP SE and Ross Stores

Assuming the 90 days trading horizon SAP SE is expected to generate 0.86 times more return on investment than Ross Stores. However, SAP SE is 1.16 times less risky than Ross Stores. It trades about 0.15 of its potential returns per unit of risk. Ross Stores is currently generating about -0.04 per unit of risk. If you would invest  21,812  in SAP SE on April 20, 2025 and sell it today you would earn a total of  4,388  from holding SAP SE or generate 20.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

SAP SE  vs.  Ross Stores

SAP SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SAP SE reported solid returns over the last few months and may actually be approaching a breakup point.

Ross Stores

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ross Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ross Stores is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with SAP SE and Ross Stores

The main advantage of trading using opposite SAP SE and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAP SE position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.

The idea behind SAP SE and Ross Stores 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..