Correlation Between Salesforce and Steelcast

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

Diversification Opportunities for Salesforce and Steelcast

0.46
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Salesforce and Steelcast is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Steelcast Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcast Limited 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 Steelcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcast Limited has no effect on the direction of Salesforce i.e., Salesforce and Steelcast go up and down completely randomly.

Pair Corralation between Salesforce and Steelcast

Considering the 90-day investment horizon Salesforce is expected to generate 0.74 times more return on investment than Steelcast. However, Salesforce is 1.34 times less risky than Steelcast. It trades about 0.38 of its potential returns per unit of risk. Steelcast Limited is currently generating about 0.07 per unit of risk. If you would invest  29,046  in Salesforce on August 26, 2024 and sell it today you would earn a total of  5,156  from holding Salesforce or generate 17.75% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Salesforce  vs.  Steelcast Limited

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.
Steelcast Limited 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Steelcast Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, Steelcast sustained solid returns over the last few months and may actually be approaching a breakup point.

Salesforce and Steelcast Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and Steelcast

The main advantage of trading using opposite Salesforce and Steelcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Steelcast 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 Steelcast will offset losses from the drop in Steelcast's long position.
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The idea behind Salesforce and Steelcast Limited 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.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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