Correlation Between PENINSULA ENERG and Salesforce

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

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

Diversification Opportunities for PENINSULA ENERG and Salesforce

-0.85

Correlation Coefficient

PENINSULA ENERG  Salesforce

Pay attention - limited upside

The 3 months correlation between PENINSULA and Salesforce is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding PENINSULA ENERG and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and PENINSULA ENERG 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 PENINSULA ENERG 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 PENINSULA ENERG i.e., PENINSULA ENERG and Salesforce go up and down completely randomly.

Pair Corralation between PENINSULA ENERG and Salesforce

Assuming the 90 days trading horizon PENINSULA ENERG is expected to generate 21.72 times more return on investment than Salesforce. However, PENINSULA ENERG is 21.72 times more volatile than Salesforce. It trades about 0.04 of its potential returns per unit of risk. Salesforce is currently generating about 0.09 per unit of risk. If you would invest  185.00  in PENINSULA ENERG on October 4, 2024 and sell it today you would lose (106.00) from holding PENINSULA ENERG or give up 57.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

PENINSULA ENERG  vs.  Salesforce

PENINSULA ENERG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PENINSULA ENERG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Salesforce

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PENINSULA ENERG and Salesforce

The main advantage of trading using opposite PENINSULA ENERG and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PENINSULA ENERG 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 PENINSULA ENERG 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.