Correlation Between Salesforce and Fuse Science

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

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

Diversification Opportunities for Salesforce and Fuse Science

0.36

Correlation Coefficient

Salesforce  Fuse Science

Weak diversification

The 3 months correlation between Salesforce and Fuse is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Fuse Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuse Science 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 Fuse Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuse Science has no effect on the direction of Salesforce i.e., Salesforce and Fuse Science go up and down completely randomly.

Pair Corralation between Salesforce and Fuse Science

Considering the 90-day investment horizon Salesforce is expected to generate 0.25 times more return on investment than Fuse Science. However, Salesforce is 4.06 times less risky than Fuse Science. It trades about -0.45 of its potential returns per unit of risk. Fuse Science is currently generating about -0.14 per unit of risk. If you would invest  33,924  in Salesforce on December 4, 2024 and sell it today you would lose (5,190) from holding Salesforce or give up 15.3% of portfolio value over 90 days.

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

Salesforce  vs.  Fuse Science

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.

Fuse Science

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fuse Science has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Salesforce and Fuse Science

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

The idea behind Salesforce and Fuse Science 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.