Correlation Between Salesforce and Arendals Fossekompani

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

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

Diversification Opportunities for Salesforce and Arendals Fossekompani

-0.28

Correlation Coefficient

Salesforce  Arendals Fossekompani

Very good diversification

The 3 months correlation between Salesforce and Arendals is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Arendals Fossekompani ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arendals Fossekompani ASA and Salesforce 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 Salesforce are associated (or correlated) with Arendals Fossekompani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arendals Fossekompani ASA has no effect on the direction of Salesforce i.e., Salesforce and Arendals Fossekompani go up and down completely randomly.

Pair Corralation between Salesforce and Arendals Fossekompani

Considering the 90-day investment horizon Salesforce is expected to under-perform the Arendals Fossekompani. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.02 times less risky than Arendals Fossekompani. The stock trades about -0.04 of its potential returns per unit of risk. The Arendals Fossekompani ASA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  15,318  in Arendals Fossekompani ASA on February 8, 2024 and sell it today you would earn a total of  2,682  from holding Arendals Fossekompani ASA or generate 17.51% return on investment over 90 days.

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

Salesforce  vs.  Arendals Fossekompani ASA

Salesforce

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Arendals Fossekompani ASA

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arendals Fossekompani ASA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Arendals Fossekompani disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Arendals Fossekompani

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

The idea behind Salesforce and Arendals Fossekompani ASA 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 Transaction History module to view history of all your transactions and understand their impact on performance.