Correlation Between Salesforce and Ambertech

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

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

Diversification Opportunities for Salesforce and Ambertech

-0.48

Correlation Coefficient

Salesforce  Ambertech

Very good diversification

The 3 months correlation between Salesforce and Ambertech is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Ambertech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambertech 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 Ambertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambertech has no effect on the direction of Salesforce i.e., Salesforce and Ambertech go up and down completely randomly.

Pair Corralation between Salesforce and Ambertech

Considering the 90-day investment horizon Salesforce is expected to under-perform the Ambertech. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 3.31 times less risky than Ambertech. The stock trades about -0.28 of its potential returns per unit of risk. The Ambertech is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Ambertech on October 23, 2024 and sell it today you would lose (1.00) from holding Ambertech or give up 6.25% of portfolio value over 90 days.

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

Salesforce  vs.  Ambertech

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.

Ambertech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambertech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Ambertech is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Salesforce and Ambertech

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

The idea behind Salesforce and Ambertech 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.