Correlation Between SAP SE and Caixa Seguridade

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

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

Diversification Opportunities for SAP SE and Caixa Seguridade

-0.35

Correlation Coefficient

SAP SE  Caixa Seguridade

Very good diversification

The 3 months correlation between SAP and Caixa is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Caixa Seguridade Participaes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caixa Seguridade Par 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 Caixa Seguridade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caixa Seguridade Par has no effect on the direction of SAP SE i.e., SAP SE and Caixa Seguridade go up and down completely randomly.

Pair Corralation between SAP SE and Caixa Seguridade

Assuming the 90 days trading horizon SAP SE is expected to generate 1.15 times more return on investment than Caixa Seguridade. However, SAP SE is 1.15 times more volatile than Caixa Seguridade Participaes. It trades about 0.12 of its potential returns per unit of risk. Caixa Seguridade Participaes is currently generating about -0.14 per unit of risk. If you would invest  154,856  in SAP SE on April 23, 2025 and sell it today you would earn a total of  16,779  from holding SAP SE or generate 10.84% return on investment over 90 days.

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

SAP SE  vs.  Caixa Seguridade Participaes

SAP SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SAP SE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Caixa Seguridade Par

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caixa Seguridade Participaes has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with SAP SE and Caixa Seguridade

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

The idea behind SAP SE and Caixa Seguridade Participaes 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.