Correlation Between Salesforce and SAP Ag

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

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

Diversification Opportunities for Salesforce and SAP Ag

0.48
  Correlation Coefficient
Salesforce
SAP Ag Systeme

Very weak diversification

The 3 months correlation between Salesforce and SAPGF is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SAP Ag Systeme in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on SAP Ag Systeme 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 SAP Ag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP Ag Systeme has no effect on the direction of Salesforce i.e., Salesforce and SAP Ag go up and down completely randomly.

Pair Corralation between Salesforce and SAP Ag

Considering the 90-day investment horizon Salesforce is expected to generate 0.97 times more return on investment than SAP Ag. However, Salesforce is 1.03 times less risky than SAP Ag. It trades about 0.05 of its potential returns per unit of risk. SAP Ag Systeme is currently generating about 0.03 per unit of risk. If you would invest  13,972  in Salesforce on May 5, 2021 and sell it today you would earn a total of  10,141  from holding Salesforce or generate 72.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy99.4%
ValuesDaily Returns

Salesforce  vs.  SAP Ag Systeme

 Performance (%) 
      Timeline 
Salesforce 
 Salesforce Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Salesforce may actually be approaching a critical reversion point that can send shares even higher in September 2021.

Salesforce Price Channel

SAP Ag Systeme 
 SAPGF Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in SAP Ag Systeme are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sluggish technical and fundamental indicators, SAP Ag may actually be approaching a critical reversion point that can send shares even higher in September 2021.

SAPGF Price Channel

Salesforce and SAP Ag Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Salesforce and SAP Ag

The main advantage of trading using opposite Salesforce and SAP Ag positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, SAP Ag 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 SAP Ag will offset losses from the drop in SAP Ag's long position.
The idea behind Salesforce and SAP Ag Systeme 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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