Correlation Between Salesforce and Hwang Chang

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

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

Diversification Opportunities for Salesforce and Hwang Chang

-0.8

Correlation Coefficient

Salesforce  Hwang Chang

Pay attention - limited upside

The 3 months correlation between Salesforce and Hwang is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Hwang Chang General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwang Chang General 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 Hwang Chang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwang Chang General has no effect on the direction of Salesforce i.e., Salesforce and Hwang Chang go up and down completely randomly.

Pair Corralation between Salesforce and Hwang Chang

Considering the 90-day investment horizon Salesforce is expected to generate 0.67 times more return on investment than Hwang Chang. However, Salesforce is 1.48 times less risky than Hwang Chang. It trades about 0.11 of its potential returns per unit of risk. Hwang Chang General is currently generating about -0.01 per unit of risk. If you would invest  28,411  in Salesforce on October 23, 2024 and sell it today you would earn a total of  4,273  from holding Salesforce or generate 15.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.31%
Values	Daily Returns

Salesforce  vs.  Hwang Chang General

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.

Hwang Chang General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hwang Chang General has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Hwang Chang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Salesforce and Hwang Chang

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

The idea behind Salesforce and Hwang Chang General 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.