Correlation Between Romios Gold and Salesforce

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

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

Diversification Opportunities for Romios Gold and Salesforce

0.02

Correlation Coefficient

Romios Gold  Salesforce

Significant diversification

The 3 months correlation between Romios and Salesforce is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Romios Gold Resources and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Romios Gold 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 Romios Gold Resources 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 Romios Gold i.e., Romios Gold and Salesforce go up and down completely randomly.

Pair Corralation between Romios Gold and Salesforce

If you would invest  1,215  in SalesforceCom CDR on October 3, 2024 and sell it today you would earn a total of  1,441  from holding SalesforceCom CDR or generate 118.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Romios Gold Resources  vs.  SalesforceCom CDR

Romios Gold Resources

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Romios Gold Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly weak basic indicators, Romios Gold showed solid returns over the last few months and may actually be approaching a breakup point.

SalesforceCom CDR

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SalesforceCom CDR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Romios Gold and Salesforce

The main advantage of trading using opposite Romios Gold and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Romios Gold 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 Romios Gold Resources 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.