Correlation Between HEINEKEN and Salesforce

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

By analyzing existing cross correlation between HEINEKEN SP ADR and Salesforce, you can compare the effects of market volatilities on HEINEKEN and Salesforce 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 HEINEKEN with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEINEKEN and Salesforce.

Diversification Opportunities for HEINEKEN and Salesforce

-0.95

Correlation Coefficient

HEINEKEN  Salesforce

Pay attention - limited upside

The 3 months correlation between HEINEKEN and Salesforce is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding HEINEKEN SP ADR and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and HEINEKEN 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 HEINEKEN SP ADR are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of HEINEKEN i.e., HEINEKEN and Salesforce go up and down completely randomly.

Pair Corralation between HEINEKEN and Salesforce

Assuming the 90 days trading horizon HEINEKEN SP ADR is expected to under-perform the Salesforce. But the stock apears to be less risky and, when comparing its historical volatility, HEINEKEN SP ADR is 1.77 times less risky than Salesforce. The stock trades about -0.21 of its potential returns per unit of risk. The Salesforce is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  22,716  in Salesforce on September 3, 2024 and sell it today you would earn a total of  8,689  from holding Salesforce or generate 38.25% return on investment over 90 days.

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

HEINEKEN SP ADR  vs.  Salesforce

HEINEKEN SP ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEINEKEN SP ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Salesforce

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 20 (%) 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.

Pair Trading with HEINEKEN and Salesforce

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

The idea behind HEINEKEN SP ADR and Salesforce 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.