Correlation Between Salesforce and Hainan Expressway

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

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

Diversification Opportunities for Salesforce and Hainan Expressway

0.0

Correlation Coefficient

Salesforce  Hainan Expressway

Pay attention - limited upside

The 3 months correlation between Salesforce and Hainan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Hainan Expressway Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Expressway 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 Expressway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Expressway has no effect on the direction of Salesforce i.e., Salesforce and Hainan Expressway go up and down completely randomly.

Pair Corralation between Salesforce and Hainan Expressway

If you would invest  28,411  in Salesforce on October 23, 2024 and sell it today you would earn a total of  4,045  from holding Salesforce or generate 14.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Salesforce  vs.  Hainan Expressway Co

Salesforce

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Hainan Expressway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hainan Expressway Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Hainan Expressway 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 Expressway

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

The idea behind Salesforce and Hainan Expressway 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.