Correlation Between Salesforce and CompX International

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

By analyzing existing cross correlation between Salesforce and CompX International, you can compare the effects of market volatilities on Salesforce and CompX International 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 CompX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and CompX International.

Diversification Opportunities for Salesforce and CompX International

0.37

Correlation Coefficient

Salesforce  CompX International

Weak diversification

The 3 months correlation between Salesforce and CompX is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International 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 CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of Salesforce i.e., Salesforce and CompX International go up and down completely randomly.

Pair Corralation between Salesforce and CompX International

Considering the 90-day investment horizon Salesforce is expected to under-perform the CompX International. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 2.24 times less risky than CompX International. The stock trades about -0.11 of its potential returns per unit of risk. The CompX International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,646  in CompX International on May 8, 2025 and sell it today you would earn a total of  20.00  from holding CompX International or generate 0.76% return on investment over 90 days.

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

Salesforce  vs.  CompX International

Salesforce

Risk-Adjusted Performance

Weakest

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

CompX International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CompX International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, CompX International is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and CompX International

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

The idea behind Salesforce and CompX International 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..