Correlation Between Salesforce and Sands China
Can any of the company-specific risk be diversified away by investing in both Salesforce and Sands China 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 Sands China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Sands China, you can compare the effects of market volatilities on Salesforce and Sands China 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 Sands China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Sands China.
Diversification Opportunities for Salesforce and Sands China
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salesforce and Sands is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Sands China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sands China 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 Sands China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sands China has no effect on the direction of Salesforce i.e., Salesforce and Sands China go up and down completely randomly.
Pair Corralation between Salesforce and Sands China
Assuming the 90 days trading horizon Salesforce is expected to generate 0.54 times more return on investment than Sands China. However, Salesforce is 1.87 times less risky than Sands China. It trades about -0.18 of its potential returns per unit of risk. Sands China is currently generating about -0.54 per unit of risk. If you would invest 32,790 in Salesforce on October 20, 2024 and sell it today you would lose (1,015) from holding Salesforce or give up 3.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Salesforce vs. Sands China
Performance |
| Timeline |
| Salesforce |
| Sands China |
Salesforce and Sands China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Sands China
The main advantage of trading using opposite Salesforce and Sands China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Sands China 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 Sands China will offset losses from the drop in Sands China's long position.| Salesforce vs. HK Electric Investments | Salesforce vs. PennantPark Investment | Salesforce vs. GRIFFIN MINING LTD | Salesforce vs. Apollo Investment Corp |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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