Correlation Between S E and SAP SE

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

By analyzing existing cross correlation between S E BANKEN A and SAP SE, you can compare the effects of market volatilities on S E and SAP SE 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 S E with a short position of SAP SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of S E and SAP SE.

Diversification Opportunities for S E and SAP SE

0.79

Correlation Coefficient

S E  SAP SE

Poor diversification

The 3 months correlation between SEBA and SAP is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding S E BANKEN A and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and S E 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 S E BANKEN A are associated (or correlated) with SAP SE. 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 S E i.e., S E and SAP SE go up and down completely randomly.

Pair Corralation between S E and SAP SE

Assuming the 90 days trading horizon S E is expected to generate 1.67 times less return on investment than SAP SE. But when comparing it to its historical volatility, S E BANKEN A is 1.64 times less risky than SAP SE. It trades about 0.15 of its potential returns per unit of risk. SAP SE is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  21,812  in SAP SE on April 22, 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	Significant
Accuracy	100.0%
Values	Daily Returns

S E BANKEN A   vs.  SAP SE

S E BANKEN

Risk-Adjusted Performance

Good

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

Pair Trading with S E and SAP SE

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

The idea behind S E BANKEN A 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.