Correlation Between Salesforce and Zoomd Technologies

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

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

Diversification Opportunities for Salesforce and Zoomd Technologies

0.27

Correlation Coefficient

Salesforce  Zoomd Technologies

Modest diversification

The 3 months correlation between Salesforce and Zoomd is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Zoomd Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoomd Technologies 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 Zoomd Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoomd Technologies has no effect on the direction of Salesforce i.e., Salesforce and Zoomd Technologies go up and down completely randomly.

Pair Corralation between Salesforce and Zoomd Technologies

Considering the 90-day investment horizon Salesforce is expected to generate 0.46 times more return on investment than Zoomd Technologies. However, Salesforce is 2.18 times less risky than Zoomd Technologies. It trades about -0.07 of its potential returns per unit of risk. Zoomd Technologies is currently generating about -0.06 per unit of risk. If you would invest  33,063  in Salesforce on November 30, 2024 and sell it today you would lose (3,508) from holding Salesforce or give up 10.61% of portfolio value over 90 days.

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

Salesforce  vs.  Zoomd Technologies

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Zoomd Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zoomd Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Salesforce and Zoomd Technologies

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

The idea behind Salesforce and Zoomd Technologies 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.