Correlation Between Salesforce and Connection Technology

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

By analyzing existing cross correlation between Salesforce and Connection Technology Systems, you can compare the effects of market volatilities on Salesforce and Connection Technology 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 Connection Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Connection Technology.

Diversification Opportunities for Salesforce and Connection Technology

-0.66

Correlation Coefficient

Salesforce  Connection Technology

Excellent diversification

The 3 months correlation between Salesforce and Connection is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Connection Technology Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Connection Technology 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 Salesforce are associated (or correlated) with Connection Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Connection Technology has no effect on the direction of Salesforce i.e., Salesforce and Connection Technology go up and down completely randomly.

Pair Corralation between Salesforce and Connection Technology

Considering the 90-day investment horizon Salesforce is expected to under-perform the Connection Technology. In addition to that, Salesforce is 1.11 times more volatile than Connection Technology Systems. It trades about -0.28 of its total potential returns per unit of risk. Connection Technology Systems is currently generating about -0.03 per unit of volatility. If you would invest  2,010  in Connection Technology Systems on October 23, 2024 and sell it today you would lose (15.00) from holding Connection Technology Systems or give up 0.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.71%
Values	Daily Returns

Salesforce  vs.  Connection Technology Systems

Salesforce

Risk-Adjusted Performance

8 of 100

OK

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

Connection Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Connection Technology Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Salesforce and Connection Technology

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

The idea behind Salesforce and Connection Technology Systems 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.