Correlation Between AIR PRODCHEMICALS and SALESFORCE INC

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

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

Diversification Opportunities for AIR PRODCHEMICALS and SALESFORCE INC

0.55

Correlation Coefficient

AIR PRODCHEMICALS  SALESFORCE INC

Very weak diversification

The 3 months correlation between AIR and SALESFORCE is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and SALESFORCE INC go up and down completely randomly.

Pair Corralation between AIR PRODCHEMICALS and SALESFORCE INC

Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to generate 0.29 times more return on investment than SALESFORCE INC. However, AIR PRODCHEMICALS is 3.41 times less risky than SALESFORCE INC. It trades about -1.03 of its potential returns per unit of risk. SALESFORCE INC CDR is currently generating about -0.43 per unit of risk. If you would invest  31,329  in AIR PRODCHEMICALS on October 5, 2024 and sell it today you would lose (3,599) from holding AIR PRODCHEMICALS or give up 11.49% of portfolio value over 90 days.

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

AIR PRODCHEMICALS  vs.  SALESFORCE INC CDR

AIR PRODCHEMICALS

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days AIR PRODCHEMICALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AIR PRODCHEMICALS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

SALESFORCE INC CDR

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days SALESFORCE INC CDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly uncertain basic indicators, SALESFORCE INC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AIR PRODCHEMICALS and SALESFORCE INC

The main advantage of trading using opposite AIR PRODCHEMICALS and SALESFORCE INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.