Correlation Between S A P and Aiadvertising

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

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

Diversification Opportunities for S A P and Aiadvertising

-0.27

Correlation Coefficient

S A P  Aiadvertising

Very good diversification

The 3 months correlation between SAP and Aiadvertising is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE ADR and Aiadvertising in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aiadvertising and S A P 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 ADR are associated (or correlated) with Aiadvertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aiadvertising has no effect on the direction of S A P i.e., S A P and Aiadvertising go up and down completely randomly.

Pair Corralation between S A P and Aiadvertising

Considering the 90-day investment horizon SAP SE ADR is expected to under-perform the Aiadvertising. But the stock apears to be less risky and, when comparing its historical volatility, SAP SE ADR is 31.25 times less risky than Aiadvertising. The stock trades about -0.06 of its potential returns per unit of risk. The Aiadvertising is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.03  in Aiadvertising on May 3, 2025 and sell it today you would lose (0.02) from holding Aiadvertising or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

SAP SE ADR  vs.  Aiadvertising

SAP SE ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SAP SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Aiadvertising

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aiadvertising are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Aiadvertising exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with S A P and Aiadvertising

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

The idea behind SAP SE ADR and Aiadvertising 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.