Correlation Between Salesforce and BRIM Biotechnology

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

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

Diversification Opportunities for Salesforce and BRIM Biotechnology

-0.81

Correlation Coefficient

Salesforce  BRIM Biotechnology

Pay attention - limited upside

The 3 months correlation between Salesforce and BRIM is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and BRIM Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRIM Biotechnology 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 BRIM Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRIM Biotechnology has no effect on the direction of Salesforce i.e., Salesforce and BRIM Biotechnology go up and down completely randomly.

Pair Corralation between Salesforce and BRIM Biotechnology

Considering the 90-day investment horizon Salesforce is expected to generate 1.14 times more return on investment than BRIM Biotechnology. However, Salesforce is 1.14 times more volatile than BRIM Biotechnology. It trades about 0.27 of its potential returns per unit of risk. BRIM Biotechnology is currently generating about -0.13 per unit of risk. If you would invest  24,767  in Salesforce on September 2, 2024 and sell it today you would earn a total of  8,232  from holding Salesforce or generate 33.24% return on investment over 90 days.

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

Salesforce  vs.  BRIM Biotechnology

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

BRIM Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRIM Biotechnology 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 BRIM Biotechnology

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

The idea behind Salesforce and BRIM Biotechnology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..