Correlation Between Salesforce and Budimex SA

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

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

Diversification Opportunities for Salesforce and Budimex SA

-0.55

Correlation Coefficient

Salesforce  Budimex SA

Excellent diversification

The 3 months correlation between Salesforce and Budimex is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Budimex SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Budimex SA 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 Budimex SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Budimex SA has no effect on the direction of Salesforce i.e., Salesforce and Budimex SA go up and down completely randomly.

Pair Corralation between Salesforce and Budimex SA

Considering the 90-day investment horizon Salesforce is expected to under-perform the Budimex SA. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.35 times less risky than Budimex SA. The stock trades about -0.18 of its potential returns per unit of risk. The Budimex SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  47,340  in Budimex SA on December 23, 2024 and sell it today you would earn a total of  13,810  from holding Budimex SA or generate 29.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Salesforce  vs.  Budimex SA

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.

Budimex SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Budimex SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Budimex SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Budimex SA

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

The idea behind Salesforce and Budimex SA 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.