Correlation Between Salesforce and SINOPHARM GROUP

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

By analyzing existing cross correlation between Salesforce and SINOPHARM GROUP 15ON, you can compare the effects of market volatilities on Salesforce and SINOPHARM GROUP 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 SINOPHARM GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and SINOPHARM GROUP.

Diversification Opportunities for Salesforce and SINOPHARM GROUP

0.63

Correlation Coefficient

Salesforce  SINOPHARM GROUP

Poor diversification

The 3 months correlation between Salesforce and SINOPHARM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and SINOPHARM GROUP 15ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINOPHARM GROUP 15ON 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 SINOPHARM GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINOPHARM GROUP 15ON has no effect on the direction of Salesforce i.e., Salesforce and SINOPHARM GROUP go up and down completely randomly.

Pair Corralation between Salesforce and SINOPHARM GROUP

Assuming the 90 days horizon Salesforce is expected to generate 1.02 times more return on investment than SINOPHARM GROUP. However, Salesforce is 1.02 times more volatile than SINOPHARM GROUP 15ON. It trades about 0.15 of its potential returns per unit of risk. SINOPHARM GROUP 15ON is currently generating about -0.03 per unit of risk. If you would invest  26,079  in Salesforce on October 5, 2024 and sell it today you would earn a total of  6,011  from holding Salesforce or generate 23.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  SINOPHARM GROUP 15ON

Salesforce

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Salesforce reported solid returns over the last few months and may actually be approaching a breakup point.

SINOPHARM GROUP 15ON

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SINOPHARM GROUP 15ON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SINOPHARM GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Salesforce and SINOPHARM GROUP

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

The idea behind Salesforce and SINOPHARM GROUP 15ON 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.