Correlation Between Salesforce and AAC

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

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

Diversification Opportunities for Salesforce and AAC

-0.26

Correlation Coefficient

Salesforce  AAC

Very good diversification

The 3 months correlation between Salesforce and AAC is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and AAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC 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 AAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC has no effect on the direction of Salesforce i.e., Salesforce and AAC go up and down completely randomly.

Pair Corralation between Salesforce and AAC

Considering the 90-day investment horizon Salesforce is expected to under-perform the AAC. In addition to that, Salesforce is 42.93 times more volatile than AAC. It trades about -0.18 of its total potential returns per unit of risk. AAC is currently generating about 0.07 per unit of volatility. If you would invest  0.05  in AAC on December 29, 2024 and sell it today you would earn a total of  0.00  from holding AAC or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Salesforce  vs.  AAC

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce 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.

AAC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AAC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, AAC is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Salesforce and AAC

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

The idea behind Salesforce and AAC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.