Correlation Between Astra Veda and Salesforce

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

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

Diversification Opportunities for Astra Veda and Salesforce

-0.81

Correlation Coefficient

Astra Veda  Salesforce

Pay attention - limited upside

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

Pair Corralation between Astra Veda and Salesforce

Given the investment horizon of 90 days Astra Veda is expected to generate 4.76 times less return on investment than Salesforce. In addition to that, Astra Veda is 8.7 times more volatile than Salesforce. It trades about 0.01 of its total potential returns per unit of risk. Salesforce is currently generating about 0.24 per unit of volatility. If you would invest  25,479  in Salesforce on September 17, 2024 and sell it today you would earn a total of  9,952  from holding Salesforce or generate 39.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Astra Veda  vs.  Salesforce

Astra Veda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Astra Veda has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat unfluctuating basic indicators, Astra Veda may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Salesforce

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 19 (%) 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 Astra Veda and Salesforce

The main advantage of trading using opposite Astra Veda and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astra Veda 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 Astra Veda 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.