Correlation Between Salesforce and Geberit AG

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

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

Diversification Opportunities for Salesforce and Geberit AG

-0.04

Correlation Coefficient

Salesforce  Geberit AG

Good diversification

The 3 months correlation between Salesforce and Geberit is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Geberit AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geberit AG 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 Geberit AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geberit AG has no effect on the direction of Salesforce i.e., Salesforce and Geberit AG go up and down completely randomly.

Pair Corralation between Salesforce and Geberit AG

Assuming the 90 days trading horizon Salesforce is expected to under-perform the Geberit AG. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.76 times less risky than Geberit AG. The stock trades about -0.31 of its potential returns per unit of risk. The Geberit AG is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  5,800  in Geberit AG on October 10, 2024 and sell it today you would lose (200.00) from holding Geberit AG or give up 3.45% of portfolio value over 90 days.

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

Salesforce  vs.  Geberit AG

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.

Geberit AG

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Geberit AG are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Geberit AG is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Salesforce and Geberit AG

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

The idea behind Salesforce and Geberit AG 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.