Correlation Between Salesforce and General Engineering

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

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

Diversification Opportunities for Salesforce and General Engineering

0.51

Correlation Coefficient

Salesforce  General Engineering

Very weak diversification

The 3 months correlation between Salesforce and General is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and General Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Engineering 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 General Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Engineering has no effect on the direction of Salesforce i.e., Salesforce and General Engineering go up and down completely randomly.

Pair Corralation between Salesforce and General Engineering

Considering the 90-day investment horizon Salesforce is expected to generate 0.26 times more return on investment than General Engineering. However, Salesforce is 3.91 times less risky than General Engineering. It trades about -0.04 of its potential returns per unit of risk. General Engineering Public is currently generating about -0.1 per unit of risk. If you would invest  32,961  in Salesforce on November 29, 2024 and sell it today you would lose (2,228) from holding Salesforce or give up 6.76% of portfolio value over 90 days.

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

Salesforce  vs.  General Engineering Public

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 very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

General Engineering

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Salesforce and General Engineering

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

The idea behind Salesforce and General Engineering Public 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .