Correlation Between SALESFORCE INC and United Overseas

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

By analyzing existing cross correlation between SALESFORCE INC CDR and United Overseas Bank, you can compare the effects of market volatilities on SALESFORCE INC and United Overseas 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 INC with a short position of United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of SALESFORCE INC and United Overseas.

Diversification Opportunities for SALESFORCE INC and United Overseas

0.61

Correlation Coefficient

SALESFORCE INC  United Overseas

Poor diversification

The 3 months correlation between SALESFORCE and United is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SALESFORCE INC CDR and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank and SALESFORCE INC 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 CDR are associated (or correlated) with United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of SALESFORCE INC i.e., SALESFORCE INC and United Overseas go up and down completely randomly.

Pair Corralation between SALESFORCE INC and United Overseas

Assuming the 90 days trading horizon SALESFORCE INC is expected to generate 1.99 times less return on investment than United Overseas. In addition to that, SALESFORCE INC is 1.73 times more volatile than United Overseas Bank. It trades about 0.04 of its total potential returns per unit of risk. United Overseas Bank is currently generating about 0.15 per unit of volatility. If you would invest  1,946  in United Overseas Bank on August 13, 2024 and sell it today you would earn a total of  609.00  from holding United Overseas Bank or generate 31.29% return on investment over 90 days.

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

SALESFORCE INC CDR  vs.  United Overseas Bank

SALESFORCE INC CDR

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SALESFORCE INC CDR are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SALESFORCE INC reported solid returns over the last few months and may actually be approaching a breakup point.

United Overseas Bank

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Overseas Bank are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, United Overseas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SALESFORCE INC and United Overseas

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

The idea behind SALESFORCE INC CDR and United Overseas Bank 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.