Correlation Between Salesforce and CEZ A

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

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

Diversification Opportunities for Salesforce and CEZ A

0.82

Correlation Coefficient

Salesforce  CEZ A

Very poor diversification

The 3 months correlation between Salesforce and CEZ is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and CEZ a s in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEZ a s 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 CEZ A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEZ a s has no effect on the direction of Salesforce i.e., Salesforce and CEZ A go up and down completely randomly.

Pair Corralation between Salesforce and CEZ A

Assuming the 90 days trading horizon Salesforce is expected to under-perform the CEZ A. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.54 times less risky than CEZ A. The stock trades about -0.31 of its potential returns per unit of risk. The CEZ a s is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,712  in CEZ a s on October 10, 2024 and sell it today you would earn a total of  268.00  from holding CEZ a s or generate 7.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  CEZ a s

Salesforce

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

CEZ a s

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CEZ a s are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CEZ A reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and CEZ A

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

The idea behind Salesforce and CEZ a s 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.