Correlation Between Salesforce and Southern Steel
Can any of the company-specific risk be diversified away by investing in both Salesforce and Southern Steel 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 Southern Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Southern Steel Bhd, you can compare the effects of market volatilities on Salesforce and Southern Steel 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 Southern Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Southern Steel.
Diversification Opportunities for Salesforce and Southern Steel
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Southern is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Southern Steel Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Steel Bhd 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 Southern Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Steel Bhd has no effect on the direction of Salesforce i.e., Salesforce and Southern Steel go up and down completely randomly.
Pair Corralation between Salesforce and Southern Steel
Considering the 90-day investment horizon Salesforce is expected to generate 0.54 times more return on investment than Southern Steel. However, Salesforce is 1.86 times less risky than Southern Steel. It trades about 0.07 of its potential returns per unit of risk. Southern Steel Bhd is currently generating about 0.03 per unit of risk. If you would invest 20,860 in Salesforce on August 31, 2024 and sell it today you would earn a total of 12,139 from holding Salesforce or generate 58.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.13% |
| Values | Daily Returns |
Salesforce vs. Southern Steel Bhd
Performance |
| Timeline |
| Salesforce |
| Southern Steel Bhd |
Salesforce and Southern Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Southern Steel
The main advantage of trading using opposite Salesforce and Southern Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Southern Steel 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 Southern Steel will offset losses from the drop in Southern Steel's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Southern Steel vs. Pantech Group Holdings | Southern Steel vs. Coraza Integrated Technology | Southern Steel vs. Choo Bee Metal | Southern Steel vs. Eonmetall Group Bhd |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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