Correlation Between Salesforce and Mangalam Organics

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

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

Diversification Opportunities for Salesforce and Mangalam Organics

-0.51

Correlation Coefficient

Salesforce  Mangalam Organics

Excellent diversification

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

Pair Corralation between Salesforce and Mangalam Organics

Considering the 90-day investment horizon Salesforce is expected to under-perform the Mangalam Organics. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.7 times less risky than Mangalam Organics. The stock trades about -0.29 of its potential returns per unit of risk. The Mangalam Organics Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  43,115  in Mangalam Organics Limited on October 10, 2024 and sell it today you would lose (1,020) from holding Mangalam Organics Limited or give up 2.37% of portfolio value over 90 days.

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

Salesforce  vs.  Mangalam Organics Limited

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.

Mangalam Organics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangalam Organics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Salesforce and Mangalam Organics

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

The idea behind Salesforce and Mangalam Organics Limited 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.