Correlation Between Salesforce and Harmony Gold

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

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

Diversification Opportunities for Salesforce and Harmony Gold

-0.56

Correlation Coefficient

Salesforce  Harmony Gold

Excellent diversification

The 3 months correlation between Salesforce and Harmony is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of Salesforce i.e., Salesforce and Harmony Gold go up and down completely randomly.

Pair Corralation between Salesforce and Harmony Gold

Assuming the 90 days trading horizon Salesforce is expected to generate 0.67 times more return on investment than Harmony Gold. However, Salesforce is 1.48 times less risky than Harmony Gold. It trades about 0.21 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about -0.08 per unit of risk. If you would invest  24,756  in Salesforce on September 27, 2024 and sell it today you would earn a total of  7,879  from holding Salesforce or generate 31.83% return on investment over 90 days.

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

Salesforce  vs.  Harmony Gold Mining

Salesforce

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Harmony Gold Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harmony Gold Mining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Salesforce and Harmony Gold

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

The idea behind Salesforce and Harmony Gold Mining 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.