Correlation Between Salesforce and Immune Therapeutics

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

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

Diversification Opportunities for Salesforce and Immune Therapeutics

-0.42

Correlation Coefficient

Salesforce  Immune Therapeutics

Very good diversification

The 3 months correlation between Salesforce and Immune is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Immune Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immune Therapeutics 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 Immune Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immune Therapeutics has no effect on the direction of Salesforce i.e., Salesforce and Immune Therapeutics go up and down completely randomly.

Pair Corralation between Salesforce and Immune Therapeutics

Considering the 90-day investment horizon Salesforce is expected to generate 0.12 times more return on investment than Immune Therapeutics. However, Salesforce is 8.59 times less risky than Immune Therapeutics. It trades about 0.11 of its potential returns per unit of risk. Immune Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  22,484  in Salesforce on January 19, 2024 and sell it today you would earn a total of  5,148  from holding Salesforce or generate 22.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	20.39%
Values	Daily Returns

Salesforce  vs.  Immune Therapeutics

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.

Immune Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Salesforce and Immune Therapeutics

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

The idea behind Salesforce and Immune Therapeutics 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.