Correlation Between Salesforce and McChip Resources

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

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

Diversification Opportunities for Salesforce and McChip Resources

-0.3

Correlation Coefficient

Salesforce  McChip Resources

Very good diversification

The 3 months correlation between Salesforce and McChip is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SalesforceCom CDR and McChip Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McChip Resources and Salesforce 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 SalesforceCom CDR are associated (or correlated) with McChip Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McChip Resources has no effect on the direction of Salesforce i.e., Salesforce and McChip Resources go up and down completely randomly.

Pair Corralation between Salesforce and McChip Resources

Assuming the 90 days trading horizon SalesforceCom CDR is expected to under-perform the McChip Resources. But the stock apears to be less risky and, when comparing its historical volatility, SalesforceCom CDR is 1.8 times less risky than McChip Resources. The stock trades about -0.17 of its potential returns per unit of risk. The McChip Resources is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  66.00  in McChip Resources on December 22, 2024 and sell it today you would earn a total of  14.00  from holding McChip Resources or generate 21.21% return on investment over 90 days.

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

SalesforceCom CDR  vs.  McChip Resources

SalesforceCom CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SalesforceCom CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

McChip Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in McChip Resources are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, McChip Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and McChip Resources

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

The idea behind SalesforceCom CDR and McChip Resources 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..