Correlation Between SALESFORCE INC and LG Display

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Can any of the company-specific risk be diversified away by investing in both SALESFORCE INC and LG Display 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 INC and LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SALESFORCE INC CDR and LG Display Co, you can compare the effects of market volatilities on SALESFORCE INC and LG Display 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 INC with a short position of LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of SALESFORCE INC and LG Display.

Diversification Opportunities for SALESFORCE INC and LG Display

SALESFORCELGADiversified AwaySALESFORCELGADiversified Away100%
-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between SALESFORCE and LGA is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SALESFORCE INC CDR and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display and SALESFORCE INC 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 INC CDR are associated (or correlated) with LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of SALESFORCE INC i.e., SALESFORCE INC and LG Display go up and down completely randomly.

Pair Corralation between SALESFORCE INC and LG Display

Assuming the 90 days trading horizon SALESFORCE INC CDR is expected to generate 2.22 times more return on investment than LG Display. However, SALESFORCE INC is 2.22 times more volatile than LG Display Co. It trades about 0.09 of its potential returns per unit of risk. LG Display Co is currently generating about -0.15 per unit of risk. If you would invest  1,537  in SALESFORCE INC CDR on October 31, 2024 and sell it today you would earn a total of  243.00  from holding SALESFORCE INC CDR or generate 15.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SALESFORCE INC CDR  vs.  LG Display Co

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -100102030
JavaScript chart by amCharts 3.21.15FOO0 LGA
       Timeline  
SALESFORCE INC CDR 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in SALESFORCE INC CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, SALESFORCE INC reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan151617181920
LG Display 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days LG Display Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan33.13.23.33.43.5

SALESFORCE INC and LG Display Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.1-7.56-5.03-2.49-0.04222.565.217.8510.513.15 0.050.100.15
JavaScript chart by amCharts 3.21.15FOO0 LGA
       Returns  

Pair Trading with SALESFORCE INC and LG Display

The main advantage of trading using opposite SALESFORCE INC and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SALESFORCE INC position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display's long position.
The idea behind SALESFORCE INC CDR and LG Display 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.
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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