Correlation Between Advantest Corp and SAP SE

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

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

Diversification Opportunities for Advantest Corp and SAP SE

-0.57

Correlation Coefficient

Advantest Corp  SAP SE

Excellent diversification

The 3 months correlation between Advantest and SAP is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Advantest Corp DRC and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE and Advantest Corp 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 Advantest Corp DRC 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 Advantest Corp i.e., Advantest Corp and SAP SE go up and down completely randomly.

Pair Corralation between Advantest Corp and SAP SE

Assuming the 90 days horizon Advantest Corp DRC is expected to generate 2.34 times more return on investment than SAP SE. However, Advantest Corp is 2.34 times more volatile than SAP SE. It trades about 0.18 of its potential returns per unit of risk. SAP SE is currently generating about -0.11 per unit of risk. If you would invest  7,309  in Advantest Corp DRC on July 7, 2025 and sell it today you would earn a total of  3,366  from holding Advantest Corp DRC or generate 46.05% return on investment over 90 days.

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

Advantest Corp DRC  vs.  SAP SE

Advantest Corp DRC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advantest Corp DRC are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Advantest Corp showed solid returns over the last few months and may actually be approaching a breakup point.

SAP SE

Risk-Adjusted Performance

Weakest

Over the last 90 days SAP SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Advantest Corp and SAP SE

The main advantage of trading using opposite Advantest Corp and SAP SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advantest Corp 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 Advantest Corp DRC 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.