Correlation Between Salesforce and SCHMID Group

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

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

Diversification Opportunities for Salesforce and SCHMID Group

-0.36

Correlation Coefficient

Salesforce  SCHMID Group

Very good diversification

The 3 months correlation between Salesforce and SCHMID is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SCHMID Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHMID Group NV 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 SCHMID Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHMID Group NV has no effect on the direction of Salesforce i.e., Salesforce and SCHMID Group go up and down completely randomly.

Pair Corralation between Salesforce and SCHMID Group

Considering the 90-day investment horizon Salesforce is expected to generate 0.33 times more return on investment than SCHMID Group. However, Salesforce is 2.99 times less risky than SCHMID Group. It trades about 0.09 of its potential returns per unit of risk. SCHMID Group NV is currently generating about -0.08 per unit of risk. If you would invest  14,560  in Salesforce on October 10, 2024 and sell it today you would earn a total of  17,933  from holding Salesforce or generate 123.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	35.35%
Values	Daily Returns

Salesforce  vs.  SCHMID Group NV

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.

SCHMID Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCHMID Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Salesforce and SCHMID Group

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

The idea behind Salesforce and SCHMID Group NV 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.