Correlation Between Salesforce and SATO Technologies

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

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

Diversification Opportunities for Salesforce and SATO Technologies

0.26

Correlation Coefficient

Salesforce  SATO Technologies

Modest diversification

The 3 months correlation between Salesforce and SATO is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SATO Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SATO Technologies Corp 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 SATO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SATO Technologies Corp has no effect on the direction of Salesforce i.e., Salesforce and SATO Technologies go up and down completely randomly.

Pair Corralation between Salesforce and SATO Technologies

Considering the 90-day investment horizon Salesforce is expected to generate 0.2 times more return on investment than SATO Technologies. However, Salesforce is 4.99 times less risky than SATO Technologies. It trades about 0.28 of its potential returns per unit of risk. SATO Technologies Corp is currently generating about 0.01 per unit of risk. If you would invest  24,729  in Salesforce on September 4, 2024 and sell it today you would earn a total of  8,372  from holding Salesforce or generate 33.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Salesforce  vs.  SATO Technologies Corp

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) 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.

SATO Technologies Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SATO Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SATO Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Salesforce and SATO Technologies

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

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