Correlation Between Salesforce and Standard Bank

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

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

Diversification Opportunities for Salesforce and Standard Bank

-0.05

Correlation Coefficient

Salesforce  Standard Bank

Good diversification

The 3 months correlation between Salesforce and Standard is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group 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 Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Salesforce i.e., Salesforce and Standard Bank go up and down completely randomly.

Pair Corralation between Salesforce and Standard Bank

Considering the 90-day investment horizon Salesforce is expected to under-perform the Standard Bank. In addition to that, Salesforce is 1.4 times more volatile than Standard Bank Group. It trades about -0.27 of its total potential returns per unit of risk. Standard Bank Group is currently generating about -0.32 per unit of volatility. If you would invest  966.00  in Standard Bank Group on January 20, 2024 and sell it today you would lose (88.00) from holding Standard Bank Group or give up 9.11% of portfolio value over 90 days.

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

Salesforce  vs.  Standard Bank Group

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.

Standard Bank Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Salesforce and Standard Bank

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

The idea behind Salesforce and Standard Bank Group 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.