Correlation Between Salesforce and YIT Oyj

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

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

Diversification Opportunities for Salesforce and YIT Oyj

0.42

Correlation Coefficient

Salesforce  YIT Oyj

Very weak diversification

The 3 months correlation between Salesforce and YIT is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and YIT Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YIT Oyj 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 YIT Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YIT Oyj has no effect on the direction of Salesforce i.e., Salesforce and YIT Oyj go up and down completely randomly.

Pair Corralation between Salesforce and YIT Oyj

Considering the 90-day investment horizon Salesforce is expected to under-perform the YIT Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.47 times less risky than YIT Oyj. The stock trades about -0.18 of its potential returns per unit of risk. The YIT Oyj is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  238.00  in YIT Oyj on December 20, 2024 and sell it today you would lose (5.00) from holding YIT Oyj or give up 2.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Salesforce  vs.  YIT Oyj

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

YIT Oyj

Risk-Adjusted Performance

Very Weak

Over the last 90 days YIT Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, YIT Oyj is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Salesforce and YIT Oyj

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

The idea behind Salesforce and YIT Oyj 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.