Correlation Between S A P and SSC Technologies

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Can any of the company-specific risk be diversified away by investing in both S A P and SSC Technologies 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 SSC Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAP Ag ADR and SSC Technologies, you can compare the effects of market volatilities on S A P and SSC Technologies 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 SSC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and SSC Technologies.

Diversification Opportunities for S A P and SSC Technologies

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between S A P and SSC Technologies is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SAP Ag ADR and SSC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies 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 Ag ADR are associated (or correlated) with SSC Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSC Technologies has no effect on the direction of S A P i.e., S A P and SSC Technologies go up and down completely randomly.

Pair Corralation between S A P and SSC Technologies

Considering the 90-day investment horizon SAP Ag ADR is expected to under-perform the SSC Technologies. In addition to that, S A P is 1.34 times more volatile than SSC Technologies. It trades about -0.04 of its total potential returns per unit of risk. SSC Technologies is currently generating about 0.01 per unit of volatility. If you would invest  5,574  in SSC Technologies on April 8, 2022 and sell it today you would earn a total of  315.00  from holding SSC Technologies or generate 5.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SAP Ag ADR  vs.  SSC Technologies

 Performance (%) 
      Timeline 
SAP Ag ADR 
S A P Performance
0 of 100
Over the last 90 days SAP Ag ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2022. The recent disarray may also be a sign of long period up-swing for the firm insiders.

S A P Price Channel

SSC Technologies 
SSC Technologies Performance
0 of 100
Over the last 90 days SSC Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0136
Payout Ratio
0.15
Last Split Factor
2:1
Forward Annual Dividend Rate
0.8
Dividend Date
2022-06-15
Ex Dividend Date
2022-05-31
Last Split Date
2016-06-27

SSC Technologies Price Channel

S A P and SSC Technologies Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with S A P and SSC Technologies

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

SAP Ag ADR

Pair trading matchups for S A P

Walker Dunlop vs. S A P
Bank of New York vs. S A P
Sachem Capital vs. S A P
Invesco Mortgage vs. S A P
Eli Lilly vs. S A P
Energous Corp vs. S A P
Merck vs. S A P
Vmware vs. S A P
Meta Platforms vs. S A P
ATT vs. S A P
Alibaba Group vs. S A P
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against S A P as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. S A P's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, S A P's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to SAP Ag ADR.
The idea behind SAP Ag ADR and SSC Technologies 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.

SSC Technologies

Pair trading matchups for SSC Technologies

Vmware vs. SSC Technologies
ATT vs. SSC Technologies
Invesco Mortgage vs. SSC Technologies
Bank of New York vs. SSC Technologies
Alibaba Group vs. SSC Technologies
Trivago NV vs. SSC Technologies
Twitter vs. SSC Technologies
SL Green vs. SSC Technologies
Energous Corp vs. SSC Technologies
Sachem Capital vs. SSC Technologies
Eli Lilly vs. SSC Technologies
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against SSC Technologies as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. SSC Technologies' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, SSC Technologies' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to SSC Technologies.
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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