Correlation Between Salesforce and Astarta Holding

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

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

Diversification Opportunities for Salesforce and Astarta Holding

0.8

Correlation Coefficient

Salesforce  Astarta Holding

Very poor diversification

The 3 months correlation between Salesforce and Astarta is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Astarta Holding NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astarta Holding NV 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 Astarta Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astarta Holding NV has no effect on the direction of Salesforce i.e., Salesforce and Astarta Holding go up and down completely randomly.

Pair Corralation between Salesforce and Astarta Holding

Considering the 90-day investment horizon Salesforce is expected to under-perform the Astarta Holding. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.8 times less risky than Astarta Holding. The stock trades about -0.23 of its potential returns per unit of risk. The Astarta Holding NV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,150  in Astarta Holding NV on October 11, 2024 and sell it today you would earn a total of  55.00  from holding Astarta Holding NV or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	80.95%
Values	Daily Returns

Salesforce  vs.  Astarta Holding NV

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.

Astarta Holding NV

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Astarta Holding NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Astarta Holding reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Astarta Holding

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

The idea behind Salesforce and Astarta Holding NV 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.