Correlation Between Innovativ Media and S A P

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

Diversification Opportunities for Innovativ Media and S A P

-0.59

Correlation Coefficient

Innovativ Media  S A P

Excellent diversification

The 3 months correlation between Innovativ and SAP is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Innovativ Media Group and SAP SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE ADR and Innovativ Media 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 Innovativ Media Group 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 ADR has no effect on the direction of Innovativ Media i.e., Innovativ Media and S A P go up and down completely randomly.

Pair Corralation between Innovativ Media and S A P

If you would invest  17,706  in SAP SE ADR on February 2, 2024 and sell it today you would earn a total of  358.00  from holding SAP SE ADR or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Innovativ Media Group  vs.  SAP SE ADR

Innovativ Media Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Innovativ Media Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Innovativ Media is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

SAP SE ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, S A P is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Innovativ Media and S A P

The main advantage of trading using opposite Innovativ Media and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovativ Media 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 Innovativ Media Group and SAP SE ADR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.