Correlation Between H FARM and SALESFORCE INC

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

By analyzing existing cross correlation between H FARM SPA and SALESFORCE INC CDR, you can compare the effects of market volatilities on H FARM and SALESFORCE INC 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 H FARM with a short position of SALESFORCE INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of H FARM and SALESFORCE INC.

Diversification Opportunities for H FARM and SALESFORCE INC

-0.82

Correlation Coefficient

H FARM  SALESFORCE INC

Pay attention - limited upside

The 3 months correlation between 5JQ and SALESFORCE is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding H FARM SPA and SALESFORCE INC CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALESFORCE INC CDR and H FARM 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 H FARM SPA are associated (or correlated) with SALESFORCE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALESFORCE INC CDR has no effect on the direction of H FARM i.e., H FARM and SALESFORCE INC go up and down completely randomly.

Pair Corralation between H FARM and SALESFORCE INC

Assuming the 90 days horizon H FARM SPA is expected to under-perform the SALESFORCE INC. In addition to that, H FARM is 1.24 times more volatile than SALESFORCE INC CDR. It trades about -0.04 of its total potential returns per unit of risk. SALESFORCE INC CDR is currently generating about 0.08 per unit of volatility. If you would invest  1,517  in SALESFORCE INC CDR on October 6, 2024 and sell it today you would earn a total of  223.00  from holding SALESFORCE INC CDR or generate 14.7% return on investment over 90 days.

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

H FARM SPA  vs.  SALESFORCE INC CDR

H FARM SPA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H FARM SPA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SALESFORCE INC CDR

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SALESFORCE INC CDR are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SALESFORCE INC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with H FARM and SALESFORCE INC

The main advantage of trading using opposite H FARM and SALESFORCE INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H FARM position performs unexpectedly, SALESFORCE INC 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 INC will offset losses from the drop in SALESFORCE INC's long position.

The idea behind H FARM SPA and SALESFORCE INC CDR 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.

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 Stocks Directory module to find actively traded stocks across global markets.