Correlation Between SAP SE and Appswarm

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

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

Diversification Opportunities for SAP SE and Appswarm

-0.4

Correlation Coefficient

SAP SE  Appswarm

Very good diversification

The 3 months correlation between SAP and Appswarm is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SAP SE and Appswarm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appswarm 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 Appswarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appswarm has no effect on the direction of SAP SE i.e., SAP SE and Appswarm go up and down completely randomly.

Pair Corralation between SAP SE and Appswarm

Assuming the 90 days horizon SAP SE is expected to generate 27.48 times less return on investment than Appswarm. But when comparing it to its historical volatility, SAP SE is 26.4 times less risky than Appswarm. It trades about 0.14 of its potential returns per unit of risk. Appswarm is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.02  in Appswarm on April 24, 2025 and sell it today you would lose (0.01) from holding Appswarm or give up 50.0% of portfolio value over 90 days.

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

SAP SE  vs.  Appswarm

SAP SE

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAP SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, SAP SE reported solid returns over the last few months and may actually be approaching a breakup point.

Appswarm

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Appswarm are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Appswarm displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SAP SE and Appswarm

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

The idea behind SAP SE and Appswarm 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.