Correlation Between Salesforce and ASE Industrial

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Can any of the company-specific risk be diversified away by investing in both Salesforce and ASE Industrial 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 ASE Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and ASE Industrial Holding, you can compare the effects of market volatilities on Salesforce and ASE Industrial 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 ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and ASE Industrial.

Diversification Opportunities for Salesforce and ASE Industrial

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Salesforce and ASE is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding 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 ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Salesforce i.e., Salesforce and ASE Industrial go up and down completely randomly.

Pair Corralation between Salesforce and ASE Industrial

Considering the 90-day investment horizon Salesforce is expected to generate 1.17 times more return on investment than ASE Industrial. However, Salesforce is 1.17 times more volatile than ASE Industrial Holding. It trades about 0.28 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about -0.07 per unit of risk. If you would invest  29,137  in Salesforce on September 1, 2024 and sell it today you would earn a total of  3,862  from holding Salesforce or generate 13.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Salesforce  vs.  ASE Industrial Holding

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.
ASE Industrial Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ASE Industrial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, ASE Industrial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Salesforce and ASE Industrial Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and ASE Industrial

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

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