Correlation Between Salesforce and Lien Viet

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

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

Diversification Opportunities for Salesforce and Lien Viet

0.21

Correlation Coefficient

Salesforce  Lien Viet

Modest diversification

The 3 months correlation between Salesforce and Lien is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Lien Viet Post in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Viet Post 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 Lien Viet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Viet Post has no effect on the direction of Salesforce i.e., Salesforce and Lien Viet go up and down completely randomly.

Pair Corralation between Salesforce and Lien Viet

Considering the 90-day investment horizon Salesforce is expected to generate 1.15 times less return on investment than Lien Viet. But when comparing it to its historical volatility, Salesforce is 1.46 times less risky than Lien Viet. It trades about 0.11 of its potential returns per unit of risk. Lien Viet Post is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,726,884  in Lien Viet Post on October 23, 2024 and sell it today you would earn a total of  438,116  from holding Lien Viet Post or generate 16.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.75%
Values	Daily Returns

Salesforce  vs.  Lien Viet Post

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.

Lien Viet Post

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lien Viet Post are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Lien Viet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Lien Viet

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

The idea behind Salesforce and Lien Viet Post 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.