Correlation Between SAP Ag and SSC Technologies

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Can any of the company-specific risk be diversified away by investing in both SAP Ag 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 SAP Ag 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 Systeme and SSC Technologies, you can compare the effects of market volatilities on SAP Ag 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 SAP Ag with a short position of SSC Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAP Ag and SSC Technologies.

Diversification Opportunities for SAP Ag and SSC Technologies

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between SAPGF and SSC Technologies is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding SAP Ag Systeme and SSC Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSC Technologies and SAP Ag 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 Systeme 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 SAP Ag i.e., SAP Ag and SSC Technologies go up and down completely randomly.

Pair Corralation between SAP Ag and SSC Technologies

Assuming the 90 days horizon SAP Ag Systeme is expected to under-perform the SSC Technologies. In addition to that, SAP Ag is 1.53 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 0.02 per unit of volatility. If you would invest  5,543  in SSC Technologies on April 7, 2022 and sell it today you would earn a total of  381.00  from holding SSC Technologies or generate 6.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

SAP Ag Systeme  vs.  SSC Technologies

 Performance (%) 
      Timeline 
SAP Ag Systeme 
SAPGF Performance
0 of 100
Over the last 90 days SAP Ag Systeme 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0231
Payout Ratio
0.43
Last Split Factor
4:1
Forward Annual Dividend Rate
2.06
Dividend Date
2020-05-26
Ex Dividend Date
2022-05-19
Last Split Date
2006-12-22

SAPGF 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
0.0135
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

SAP Ag and SSC Technologies Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with SAP Ag and SSC Technologies

The main advantage of trading using opposite SAP Ag and SSC Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAP Ag 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 Systeme

Pair trading matchups for SAP Ag

Purecycle Technologies vs. SAP Ag
Penn Natl vs. SAP Ag
Erie Indemnity vs. SAP Ag
Ezcorp vs. SAP Ag
Albemarle Corp vs. SAP Ag
Greenlight Cap vs. SAP Ag
Alpha Metallurgical vs. SAP Ag
ATT vs. SAP Ag
Mandiant vs. SAP Ag
Eastgroup Properties vs. SAP Ag
Ollies Bargain vs. SAP Ag
United Fire vs. SAP Ag
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 SAP Ag 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. SAP Ag'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, SAP Ag'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 Systeme.
The idea behind SAP Ag Systeme 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

Greenlight Cap vs. SSC Technologies
ATT vs. SSC Technologies
Eastgroup Properties vs. SSC Technologies
Freyr Battery vs. SSC Technologies
Penn Natl vs. SSC Technologies
Twitter vs. SSC Technologies
Ollies Bargain vs. SSC Technologies
Ezcorp vs. SSC Technologies
Bancfirst Corp vs. SSC Technologies
MP Materials vs. SSC Technologies
Albemarle Corp vs. SSC Technologies
Occidental Petroleum 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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