Correlation Between SHIP HEALTHCARE and Salesforce

Can any of the company-specific risk be diversified away by investing in both SHIP HEALTHCARE 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 SHIP HEALTHCARE and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SHIP HEALTHCARE HLDGINC and Salesforce, you can compare the effects of market volatilities on SHIP HEALTHCARE 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 SHIP HEALTHCARE with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIP HEALTHCARE and Salesforce.

Diversification Opportunities for SHIP HEALTHCARE and Salesforce

-0.61

Correlation Coefficient

SHIP HEALTHCARE  Salesforce

Excellent diversification

The 3 months correlation between SHIP and Salesforce is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SHIP HEALTHCARE HLDGINC and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and SHIP HEALTHCARE 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 SHIP HEALTHCARE HLDGINC 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 SHIP HEALTHCARE i.e., SHIP HEALTHCARE and Salesforce go up and down completely randomly.

Pair Corralation between SHIP HEALTHCARE and Salesforce

Assuming the 90 days horizon SHIP HEALTHCARE is expected to generate 8.49 times less return on investment than Salesforce. But when comparing it to its historical volatility, SHIP HEALTHCARE HLDGINC is 2.37 times less risky than Salesforce. It trades about 0.01 of its potential returns per unit of risk. Salesforce is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  32,516  in Salesforce on September 27, 2024 and sell it today you would earn a total of  119.00  from holding Salesforce or generate 0.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SHIP HEALTHCARE HLDGINC  vs.  Salesforce

SHIP HEALTHCARE HLDGINC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHIP HEALTHCARE HLDGINC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SHIP HEALTHCARE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Salesforce

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SHIP HEALTHCARE and Salesforce

The main advantage of trading using opposite SHIP HEALTHCARE and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIP HEALTHCARE 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.

The idea behind SHIP HEALTHCARE HLDGINC and Salesforce 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.