Correlation Between Clear Blue and Salesforce

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

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

Diversification Opportunities for Clear Blue and Salesforce

-0.69

Correlation Coefficient

Clear Blue  Salesforce

Excellent diversification

The 3 months correlation between Clear and Salesforce is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Clear Blue Technologies and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Clear Blue 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 Clear Blue Technologies 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 SalesforceCom CDR has no effect on the direction of Clear Blue i.e., Clear Blue and Salesforce go up and down completely randomly.

Pair Corralation between Clear Blue and Salesforce

Assuming the 90 days trading horizon Clear Blue Technologies is expected to generate 8.55 times more return on investment than Salesforce. However, Clear Blue is 8.55 times more volatile than SalesforceCom CDR. It trades about 0.28 of its potential returns per unit of risk. SalesforceCom CDR is currently generating about -0.26 per unit of risk. If you would invest  2.00  in Clear Blue Technologies on October 22, 2024 and sell it today you would earn a total of  1.00  from holding Clear Blue Technologies or generate 50.0% return on investment over 90 days.

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

Clear Blue Technologies  vs.  SalesforceCom CDR

Clear Blue Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Clear Blue Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal essential indicators, Clear Blue showed solid returns over the last few months and may actually be approaching a breakup point.

SalesforceCom CDR

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SalesforceCom CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clear Blue and Salesforce

The main advantage of trading using opposite Clear Blue and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clear Blue 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 Clear Blue Technologies and SalesforceCom 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.