Correlation Between AIR CHINA and SALESFORCE INC
Can any of the company-specific risk be diversified away by investing in both AIR CHINA and SALESFORCE INC 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 AIR CHINA and SALESFORCE INC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR CHINA LTD and SALESFORCE INC CDR, you can compare the effects of market volatilities on AIR CHINA and SALESFORCE INC 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 AIR CHINA with a short position of SALESFORCE INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR CHINA and SALESFORCE INC.
Diversification Opportunities for AIR CHINA and SALESFORCE INC
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AIR and SALESFORCE is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding AIR CHINA LTD and SALESFORCE INC CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALESFORCE INC CDR and AIR CHINA 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 AIR CHINA LTD are associated (or correlated) with SALESFORCE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALESFORCE INC CDR has no effect on the direction of AIR CHINA i.e., AIR CHINA and SALESFORCE INC go up and down completely randomly.
Pair Corralation between AIR CHINA and SALESFORCE INC
Assuming the 90 days trading horizon AIR CHINA LTD is expected to generate 0.57 times more return on investment than SALESFORCE INC. However, AIR CHINA LTD is 1.75 times less risky than SALESFORCE INC. It trades about 0.33 of its potential returns per unit of risk. SALESFORCE INC CDR is currently generating about 0.12 per unit of risk. If you would invest 1,010 in AIR CHINA LTD on September 12, 2024 and sell it today you would earn a total of 220.00 from holding AIR CHINA LTD or generate 21.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR CHINA LTD vs. SALESFORCE INC CDR
Performance |
| Timeline |
| AIR CHINA LTD |
| SALESFORCE INC CDR |
AIR CHINA and SALESFORCE INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR CHINA and SALESFORCE INC
The main advantage of trading using opposite AIR CHINA and SALESFORCE INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR CHINA position performs unexpectedly, SALESFORCE INC 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 SALESFORCE INC will offset losses from the drop in SALESFORCE INC's long position.| AIR CHINA vs. ASSOC BR FOODS | AIR CHINA vs. Lion One Metals | AIR CHINA vs. PARKEN Sport Entertainment | AIR CHINA vs. PREMIER FOODS |
| SALESFORCE INC vs. Salesforce | SALESFORCE INC vs. Superior Plus Corp | SALESFORCE INC vs. SIVERS SEMICONDUCTORS AB | SALESFORCE INC vs. Norsk Hydro ASA |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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