Correlation Between SAP Ag and Salesforce

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

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

Diversification Opportunities for SAP Ag and Salesforce

0.48
  Correlation Coefficient
SAP Ag Systeme
Salesforce

Very weak diversification

The 3 months correlation between SAPGF and Salesforce is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding SAP Ag Systeme and Salesforce in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and SAP Ag 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 Systeme 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 SAP Ag i.e., SAP Ag and Salesforce go up and down completely randomly.

Pair Corralation between SAP Ag and Salesforce

Assuming the 90 days horizon SAP Ag Systeme is expected to generate 1.09 times more return on investment than Salesforce. However, SAP Ag is 1.09 times more volatile than Salesforce. It trades about 0.05 of its potential returns per unit of risk. Salesforce is currently generating about 0.05 per unit of risk. If you would invest  12,965  in SAP Ag Systeme on May 1, 2021 and sell it today you would earn a total of  1,275  from holding SAP Ag Systeme or generate 9.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SAP Ag Systeme  vs.  Salesforce

 Performance (%) 
      Timeline 
SAP Ag Systeme 
 SAPGF Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in SAP Ag Systeme are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, SAP Ag is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

SAPGF 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

SAP Ag and Salesforce Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with SAP Ag and Salesforce

The main advantage of trading using opposite SAP Ag and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAP Ag 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 Systeme 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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