Correlation Between FLOW TRADERS and Salesforce
Can any of the company-specific risk be diversified away by investing in both FLOW TRADERS and Salesforce 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 FLOW TRADERS and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLOW TRADERS LTD and Salesforce, you can compare the effects of market volatilities on FLOW TRADERS and Salesforce 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 FLOW TRADERS with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLOW TRADERS and Salesforce.
Diversification Opportunities for FLOW TRADERS and Salesforce
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FLOW and Salesforce is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding FLOW TRADERS LTD and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and FLOW TRADERS 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 FLOW TRADERS LTD are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of FLOW TRADERS i.e., FLOW TRADERS and Salesforce go up and down completely randomly.
Pair Corralation between FLOW TRADERS and Salesforce
Assuming the 90 days horizon FLOW TRADERS is expected to generate 6.62 times less return on investment than Salesforce. But when comparing it to its historical volatility, FLOW TRADERS LTD is 1.1 times less risky than Salesforce. It trades about 0.01 of its potential returns per unit of risk. Salesforce is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 19,327 in Salesforce on August 31, 2024 and sell it today you would earn a total of 12,078 from holding Salesforce or generate 62.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
FLOW TRADERS LTD vs. Salesforce
Performance |
| Timeline |
| FLOW TRADERS LTD |
| Salesforce |
FLOW TRADERS and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLOW TRADERS and Salesforce
The main advantage of trading using opposite FLOW TRADERS and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLOW TRADERS position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.| FLOW TRADERS vs. Chunghwa Telecom Co | FLOW TRADERS vs. Astral Foods Limited | FLOW TRADERS vs. Singapore Telecommunications Limited | FLOW TRADERS vs. Infrastrutture Wireless Italiane |
| Salesforce vs. SAP SE | Salesforce vs. Superior Plus Corp | Salesforce vs. NMI Holdings | Salesforce vs. Origin Agritech |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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