Correlation Between Salesforce and Fastbase

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

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

Diversification Opportunities for Salesforce and Fastbase

-0.44

Correlation Coefficient

Salesforce  Fastbase

Very good diversification

The 3 months correlation between Salesforce and Fastbase is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Fastbase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastbase 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 Fastbase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastbase has no effect on the direction of Salesforce i.e., Salesforce and Fastbase go up and down completely randomly.

Pair Corralation between Salesforce and Fastbase

Considering the 90-day investment horizon Salesforce is expected to under-perform the Fastbase. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 4.56 times less risky than Fastbase. The stock trades about 0.0 of its potential returns per unit of risk. The Fastbase is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Fastbase on October 26, 2024 and sell it today you would earn a total of  25.00  from holding Fastbase or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Salesforce  vs.  Fastbase

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.

Fastbase

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fastbase are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Fastbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Fastbase

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

The idea behind Salesforce and Fastbase 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.