Correlation Between Profound Medical and Salesforce

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

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

Diversification Opportunities for Profound Medical and Salesforce

0.24

Correlation Coefficient

Profound Medical  Salesforce

Modest diversification

The 3 months correlation between Profound and Salesforce is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Profound Medical 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 Profound Medical Corp 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 SalesforceCom CDR has no effect on the direction of Profound Medical i.e., Profound Medical and Salesforce go up and down completely randomly.

Pair Corralation between Profound Medical and Salesforce

Assuming the 90 days trading horizon Profound Medical Corp is expected to under-perform the Salesforce. In addition to that, Profound Medical is 1.74 times more volatile than SalesforceCom CDR. It trades about 0.0 of its total potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.08 per unit of volatility. If you would invest  1,233  in SalesforceCom CDR on October 11, 2024 and sell it today you would earn a total of  1,366  from holding SalesforceCom CDR or generate 110.79% return on investment over 90 days.

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

Profound Medical Corp  vs.  SalesforceCom CDR

Profound Medical Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Profound Medical Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Profound Medical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SalesforceCom CDR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SalesforceCom CDR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Profound Medical and Salesforce

The main advantage of trading using opposite Profound Medical and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Profound Medical 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 Profound Medical Corp and SalesforceCom CDR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.