Correlation Between Salesforce and Adecco Group

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

By analyzing existing cross correlation between Salesforce and Adecco Group AG, you can compare the effects of market volatilities on Salesforce and Adecco Group 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 Salesforce with a short position of Adecco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Adecco Group.

Diversification Opportunities for Salesforce and Adecco Group

0.69

Correlation Coefficient

Salesforce  Adecco Group

Poor diversification

The 3 months correlation between Salesforce and Adecco is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Adecco Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group AG and Salesforce 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 Salesforce are associated (or correlated) with Adecco Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group AG has no effect on the direction of Salesforce i.e., Salesforce and Adecco Group go up and down completely randomly.

Pair Corralation between Salesforce and Adecco Group

Considering the 90-day investment horizon Salesforce is expected to under-perform the Adecco Group. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.35 times less risky than Adecco Group. The stock trades about -0.19 of its potential returns per unit of risk. The Adecco Group AG is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  4,003  in Adecco Group AG on January 19, 2024 and sell it today you would lose (213.00) from holding Adecco Group AG or give up 5.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Salesforce  vs.  Adecco Group AG

Salesforce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Adecco Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Adecco Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Salesforce and Adecco Group

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

The idea behind Salesforce and Adecco Group AG 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..