Correlation Between Salesforce and Guangzhou Jinyi

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Can any of the company-specific risk be diversified away by investing in both Salesforce and Guangzhou Jinyi 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 Guangzhou Jinyi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Guangzhou Jinyi Media, you can compare the effects of market volatilities on Salesforce and Guangzhou Jinyi 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 Guangzhou Jinyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Guangzhou Jinyi.

Diversification Opportunities for Salesforce and Guangzhou Jinyi

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Salesforce and Guangzhou is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Guangzhou Jinyi Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Jinyi Media 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 Guangzhou Jinyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Jinyi Media has no effect on the direction of Salesforce i.e., Salesforce and Guangzhou Jinyi go up and down completely randomly.

Pair Corralation between Salesforce and Guangzhou Jinyi

Considering the 90-day investment horizon Salesforce is expected to generate 0.6 times more return on investment than Guangzhou Jinyi. However, Salesforce is 1.65 times less risky than Guangzhou Jinyi. It trades about 0.1 of its potential returns per unit of risk. Guangzhou Jinyi Media is currently generating about 0.0 per unit of risk. If you would invest  13,989  in Salesforce on August 28, 2024 and sell it today you would earn a total of  19,922  from holding Salesforce or generate 142.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.8%
ValuesDaily Returns

Salesforce  vs.  Guangzhou Jinyi Media

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 20 (%) 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.
Guangzhou Jinyi Media 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Jinyi Media are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Jinyi sustained solid returns over the last few months and may actually be approaching a breakup point.

Salesforce and Guangzhou Jinyi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and Guangzhou Jinyi

The main advantage of trading using opposite Salesforce and Guangzhou Jinyi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Guangzhou Jinyi 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 Guangzhou Jinyi will offset losses from the drop in Guangzhou Jinyi's long position.
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The idea behind Salesforce and Guangzhou Jinyi Media 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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