Correlation Between Salesforce and Fosun International

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

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

Diversification Opportunities for Salesforce and Fosun International

0.44

Correlation Coefficient

Salesforce  Fosun International

Very weak diversification

The 3 months correlation between Salesforce and Fosun is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Fosun International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fosun International 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 Fosun International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fosun International has no effect on the direction of Salesforce i.e., Salesforce and Fosun International go up and down completely randomly.

Pair Corralation between Salesforce and Fosun International

Considering the 90-day investment horizon Salesforce is expected to generate 0.27 times more return on investment than Fosun International. However, Salesforce is 3.71 times less risky than Fosun International. It trades about 0.16 of its potential returns per unit of risk. Fosun International is currently generating about 0.01 per unit of risk. If you would invest  23,588  in Salesforce on September 1, 2024 and sell it today you would earn a total of  9,411  from holding Salesforce or generate 39.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

Salesforce  vs.  Fosun International

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Salesforce displayed solid returns over the last few months and may actually be approaching a breakup point.

Fosun International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fosun International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Fosun International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Fosun International

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

The idea behind Salesforce and Fosun International 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.