Correlation Between Sparx Technology and Salesforce

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

By analyzing existing cross correlation between Sparx Technology and SalesforceCom CDR, you can compare the effects of market volatilities on Sparx Technology 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 Sparx Technology with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sparx Technology and Salesforce.

Diversification Opportunities for Sparx Technology and Salesforce

0.07

Correlation Coefficient

Sparx Technology  Salesforce

Significant diversification

The 3 months correlation between Sparx and Salesforce is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sparx Technology and SalesforceCom CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalesforceCom CDR and Sparx Technology 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 Sparx Technology 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 SalesforceCom CDR has no effect on the direction of Sparx Technology i.e., Sparx Technology and Salesforce go up and down completely randomly.

Pair Corralation between Sparx Technology and Salesforce

Assuming the 90 days trading horizon Sparx Technology is expected to generate 1.19 times more return on investment than Salesforce. However, Sparx Technology is 1.19 times more volatile than SalesforceCom CDR. It trades about 0.4 of its potential returns per unit of risk. SalesforceCom CDR is currently generating about 0.05 per unit of risk. If you would invest  1,982  in Sparx Technology on April 23, 2025 and sell it today you would earn a total of  1,153  from holding Sparx Technology or generate 58.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Sparx Technology  vs.  SalesforceCom CDR

Sparx Technology

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Sparx Technology are ranked lower than 31 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sparx Technology showed solid returns over the last few months and may actually be approaching a breakup point.

SalesforceCom CDR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SalesforceCom CDR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Salesforce is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Sparx Technology and Salesforce

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

The idea behind Sparx Technology and SalesforceCom CDR 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.