Correlation Between S A P and Salesforce

By analyzing existing cross correlation between SAP Ag ADR and Salesforce, you can compare the effects of market volatilities on S A P and Salesforce 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 S A P with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of S A P and Salesforce.

Specify exactly 2 symbols:

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

Diversification Opportunities for S A P and Salesforce

0.45
  Correlation Coefficient
SAP Ag ADR
Salesforce

Very weak diversification

The 3 months correlation between S A P and Salesforce is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding SAP Ag ADR and Salesforce in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and S A P 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 SAP Ag ADR are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of S A P i.e., S A P and Salesforce go up and down completely randomly.

Pair Corralation between S A P and Salesforce

Considering the 90-day investment horizon SAP Ag ADR is expected to generate 1.5 times more return on investment than Salesforce. However, S A P is 1.5 times more volatile than Salesforce. It trades about 0.08 of its potential returns per unit of risk. Salesforce is currently generating about -0.06 per unit of risk. If you would invest  14,046  in SAP Ag ADR on May 1, 2021 and sell it today you would earn a total of  326.00  from holding SAP Ag ADR or generate 2.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SAP Ag ADR  vs.  Salesforce

 Performance (%) 
      Timeline 
SAP Ag ADR 
 S A P Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in SAP Ag ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, S A P is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the insiders.

S A P Price Channel

Salesforce 
 Salesforce Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 6 (%) 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 August 2021.

Salesforce Price Channel

S A P and Salesforce Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with S A P and Salesforce

The main advantage of trading using opposite S A P and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S A P position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.
The idea behind SAP Ag ADR and Salesforce 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

Other Complementary Tools

Theme Ratings
Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go