Correlation Between SSC Technologies and Salesforce

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Can any of the company-specific risk be diversified away by investing in both SSC Technologies 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 SSC Technologies and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SSC Technologies and Salesforce, you can compare the effects of market volatilities on SSC Technologies 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 SSC Technologies with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSC Technologies and Salesforce.

Diversification Opportunities for SSC Technologies and Salesforce

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SSC Technologies and Salesforce is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding SSC Technologies and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and SSC Technologies 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 SSC Technologies 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 SSC Technologies i.e., SSC Technologies and Salesforce go up and down completely randomly.

Pair Corralation between SSC Technologies and Salesforce

Given the investment horizon of 90 days SSC Technologies is expected to generate 3.01 times less return on investment than Salesforce. But when comparing it to its historical volatility, SSC Technologies is 1.18 times less risky than Salesforce. It trades about 0.01 of its potential returns per unit of risk. Salesforce is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  18,245  in Salesforce on May 21, 2022 and sell it today you would earn a total of  132.00  from holding Salesforce or generate 0.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SSC Technologies  vs.  Salesforce

 Performance (%) 
       Timeline  
SSC Technologies 
SSC Technologies Performance
0 of 100
Over the last 90 days SSC Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SSC Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SSC Technologies Price Channel

Salesforce 
Salesforce Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Salesforce revealed solid returns over the last few months and may actually be approaching a breakup point.

Salesforce Price Channel

SSC Technologies and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SSC Technologies and Salesforce

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

SSC Technologies

Pair trading matchups for SSC Technologies

The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against SSC Technologies as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. SSC Technologies' systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, SSC Technologies' unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to SSC Technologies.
The idea behind SSC Technologies 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.

Salesforce

Pair trading matchups for Salesforce

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 Global Correlations module to find global opportunities by holding instruments from different markets.

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