Correlation Between Salesforce and SKAGEN M

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

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

Diversification Opportunities for Salesforce and SKAGEN M

0.3

Correlation Coefficient

Salesforce  SKAGEN M

Weak diversification

The 3 months correlation between Salesforce and SKAGEN is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SKAGEN m in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKAGEN m 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 SKAGEN M. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKAGEN m has no effect on the direction of Salesforce i.e., Salesforce and SKAGEN M go up and down completely randomly.

Pair Corralation between Salesforce and SKAGEN M

Considering the 90-day investment horizon Salesforce is expected to generate 2.28 times more return on investment than SKAGEN M. However, Salesforce is 2.28 times more volatile than SKAGEN m. It trades about 0.0 of its potential returns per unit of risk. SKAGEN m is currently generating about -0.05 per unit of risk. If you would invest  27,867  in Salesforce on January 25, 2024 and sell it today you would lose (199.00) from holding Salesforce or give up 0.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Salesforce  vs.  SKAGEN m

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.

SKAGEN m

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SKAGEN m has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SKAGEN M is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Salesforce and SKAGEN M

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

The idea behind Salesforce and SKAGEN m 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.