Correlation Between Salesforce and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both Salesforce and Airtel Africa 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 Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Airtel Africa Plc, you can compare the effects of market volatilities on Salesforce and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Airtel Africa.
Diversification Opportunities for Salesforce and Airtel Africa
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Salesforce and Airtel is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc 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 Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of Salesforce i.e., Salesforce and Airtel Africa go up and down completely randomly.
Pair Corralation between Salesforce and Airtel Africa
Considering the 90-day investment horizon Salesforce is expected to generate 0.43 times more return on investment than Airtel Africa. However, Salesforce is 2.35 times less risky than Airtel Africa. It trades about 0.35 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about -0.12 per unit of risk. If you would invest 29,377 in Salesforce on August 29, 2024 and sell it today you would earn a total of 4,941 from holding Salesforce or generate 16.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salesforce vs. Airtel Africa Plc
Performance |
| Timeline |
| Salesforce |
| Airtel Africa Plc |
Salesforce and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Airtel Africa
The main advantage of trading using opposite Salesforce and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Airtel Africa vs. BCE Inc | Airtel Africa vs. Axiologix | Airtel Africa vs. Advanced Info Service | Airtel Africa vs. American Nortel Communications |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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