Correlation Between Salesforce and BIONTECH

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

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

Diversification Opportunities for Salesforce and BIONTECH

0.54

Correlation Coefficient

Salesforce  BIONTECH

Very weak diversification

The 3 months correlation between Salesforce and BIONTECH is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding salesforce inc and BIONTECH SE DRN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIONTECH SE DRN 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 inc are associated (or correlated) with BIONTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIONTECH SE DRN has no effect on the direction of Salesforce i.e., Salesforce and BIONTECH go up and down completely randomly.

Pair Corralation between Salesforce and BIONTECH

Assuming the 90 days trading horizon salesforce inc is expected to generate 0.5 times more return on investment than BIONTECH. However, salesforce inc is 2.0 times less risky than BIONTECH. It trades about 0.34 of its potential returns per unit of risk. BIONTECH SE DRN is currently generating about 0.16 per unit of risk. If you would invest  6,229  in salesforce inc on September 5, 2024 and sell it today you would earn a total of  2,947  from holding salesforce inc or generate 47.31% return on investment over 90 days.

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

salesforce inc  vs.  BIONTECH SE DRN

salesforce inc

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in salesforce inc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Salesforce sustained solid returns over the last few months and may actually be approaching a breakup point.

BIONTECH SE DRN

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BIONTECH SE DRN are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BIONTECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and BIONTECH

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

The idea behind salesforce inc and BIONTECH SE DRN 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.