Correlation Between Salesforce and ENCP Old

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

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

Diversification Opportunities for Salesforce and ENCP Old

-0.22

Correlation Coefficient

Salesforce  ENCP Old

Very good diversification

The 3 months correlation between Salesforce and ENCP is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and ENCP Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENCP Old 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 ENCP Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENCP Old has no effect on the direction of Salesforce i.e., Salesforce and ENCP Old go up and down completely randomly.

Pair Corralation between Salesforce and ENCP Old

Considering the 90-day investment horizon Salesforce is expected to generate 0.25 times more return on investment than ENCP Old. However, Salesforce is 4.06 times less risky than ENCP Old. It trades about 0.09 of its potential returns per unit of risk. ENCP Old is currently generating about -0.01 per unit of risk. If you would invest  14,560  in Salesforce on October 10, 2024 and sell it today you would earn a total of  17,933  from holding Salesforce or generate 123.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	58.79%
Values	Daily Returns

Salesforce  vs.  ENCP Old

Salesforce

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 7 (%) 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.

ENCP Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ENCP Old has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, ENCP Old is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Salesforce and ENCP Old

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

The idea behind Salesforce and ENCP Old 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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.