Correlation Between Salesforce and Skyline Investment

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

By analyzing existing cross correlation between PZ Cormay SA and Skyline Investment SA, you can compare the effects of market volatilities on Salesforce and Skyline Investment 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 Skyline Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Skyline Investment.

Diversification Opportunities for Salesforce and Skyline Investment

0.25

Correlation Coefficient

Salesforce  Skyline Investment

Modest diversification

The 3 months correlation between Salesforce and Skyline is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding PZ Cormay SA and Skyline Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skyline Investment 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 PZ Cormay SA are associated (or correlated) with Skyline Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skyline Investment has no effect on the direction of Salesforce i.e., Salesforce and Skyline Investment go up and down completely randomly.

Pair Corralation between Salesforce and Skyline Investment

Assuming the 90 days trading horizon PZ Cormay SA is expected to generate 2.0 times more return on investment than Skyline Investment. However, Salesforce is 2.0 times more volatile than Skyline Investment SA. It trades about 0.1 of its potential returns per unit of risk. Skyline Investment SA is currently generating about 0.09 per unit of risk. If you would invest  43.00  in PZ Cormay SA on December 4, 2024 and sell it today you would earn a total of  11.00  from holding PZ Cormay SA or generate 25.58% return on investment over 90 days.

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

PZ Cormay SA  vs.  Skyline Investment SA

PZ Cormay SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PZ Cormay SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Salesforce reported solid returns over the last few months and may actually be approaching a breakup point.

Skyline Investment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Skyline Investment SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Skyline Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Skyline Investment

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

The idea behind PZ Cormay SA and Skyline Investment SA 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.