Correlation Between Salesforce and Hainan Haiyao

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

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

Diversification Opportunities for Salesforce and Hainan Haiyao

-0.19

Correlation Coefficient

Salesforce  Hainan Haiyao

Good diversification

The 3 months correlation between Salesforce and Hainan is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Hainan Haiyao Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Haiyao 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 Hainan Haiyao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Haiyao has no effect on the direction of Salesforce i.e., Salesforce and Hainan Haiyao go up and down completely randomly.

Pair Corralation between Salesforce and Hainan Haiyao

Considering the 90-day investment horizon Salesforce is expected to under-perform the Hainan Haiyao. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 1.64 times less risky than Hainan Haiyao. The stock trades about -0.16 of its potential returns per unit of risk. The Hainan Haiyao Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  482.00  in Hainan Haiyao Co on December 25, 2024 and sell it today you would lose (7.00) from holding Hainan Haiyao Co or give up 1.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Salesforce  vs.  Hainan Haiyao Co

Salesforce

Risk-Adjusted Performance

Very Weak

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hainan Haiyao

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hainan Haiyao Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hainan Haiyao is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Salesforce and Hainan Haiyao

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

The idea behind Salesforce and Hainan Haiyao Co 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.