Correlation Between Salesforce and Launch One

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

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

Diversification Opportunities for Salesforce and Launch One

0.78

Correlation Coefficient

Salesforce  Launch One

Poor diversification

The 3 months correlation between Salesforce and Launch is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Launch One Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch One Acquisition 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 Launch One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch One Acquisition has no effect on the direction of Salesforce i.e., Salesforce and Launch One go up and down completely randomly.

Pair Corralation between Salesforce and Launch One

Considering the 90-day investment horizon Salesforce is expected to under-perform the Launch One. In addition to that, Salesforce is 6.52 times more volatile than Launch One Acquisition. It trades about -0.25 of its total potential returns per unit of risk. Launch One Acquisition is currently generating about 0.14 per unit of volatility. If you would invest  1,006  in Launch One Acquisition on October 10, 2024 and sell it today you would earn a total of  6.00  from holding Launch One Acquisition or generate 0.6% return on investment over 90 days.

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

Salesforce  vs.  Launch One Acquisition

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.

Launch One Acquisition

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Launch One is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Salesforce and Launch One

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

The idea behind Salesforce and Launch One Acquisition 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.