Correlation Between Salesforce and Astra Veda

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

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

Diversification Opportunities for Salesforce and Astra Veda

-0.81

Correlation Coefficient

Salesforce  Astra Veda

Pay attention - limited upside

The 3 months correlation between Salesforce and Astra is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Astra Veda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra Veda 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 Astra Veda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra Veda has no effect on the direction of Salesforce i.e., Salesforce and Astra Veda go up and down completely randomly.

Pair Corralation between Salesforce and Astra Veda

Considering the 90-day investment horizon Salesforce is expected to generate 0.11 times more return on investment than Astra Veda. However, Salesforce is 8.77 times less risky than Astra Veda. It trades about 0.24 of its potential returns per unit of risk. Astra Veda is currently generating about 0.01 per unit of risk. If you would invest  25,479  in Salesforce on September 17, 2024 and sell it today you would earn a total of  9,972  from holding Salesforce or generate 39.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Astra Veda

Salesforce

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 18 (%) 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.

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.

Pair Trading with Salesforce and Astra Veda

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

The idea behind Salesforce and Astra Veda 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.