Correlation Between ZOO Digital and Salesforce

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

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

Diversification Opportunities for ZOO Digital and Salesforce

0.81

Correlation Coefficient

ZOO Digital  Salesforce

Very poor diversification

The 3 months correlation between ZOO and Salesforce is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ZOO Digital Group and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and ZOO Digital 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 ZOO Digital Group 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 ZOO Digital i.e., ZOO Digital and Salesforce go up and down completely randomly.

Pair Corralation between ZOO Digital and Salesforce

Assuming the 90 days horizon ZOO Digital Group is expected to under-perform the Salesforce. In addition to that, ZOO Digital is 4.48 times more volatile than Salesforce. It trades about -0.13 of its total potential returns per unit of risk. Salesforce is currently generating about -0.16 per unit of volatility. If you would invest  33,574  in Salesforce on December 28, 2024 and sell it today you would lose (5,793) from holding Salesforce or give up 17.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.24%
Values	Daily Returns

ZOO Digital Group  vs.  Salesforce

ZOO Digital Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days ZOO Digital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ZOO Digital and Salesforce

The main advantage of trading using opposite ZOO Digital and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZOO Digital 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 ZOO Digital Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.