Correlation Between Salesforce and Korea Computer
Can any of the company-specific risk be diversified away by investing in both Salesforce and Korea Computer 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 Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Korea Computer Systems, you can compare the effects of market volatilities on Salesforce and Korea Computer 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 Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Korea Computer.
Diversification Opportunities for Salesforce and Korea Computer
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Salesforce and Korea is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Korea Computer Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Systems 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 Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer Systems has no effect on the direction of Salesforce i.e., Salesforce and Korea Computer go up and down completely randomly.
Pair Corralation between Salesforce and Korea Computer
Considering the 90-day investment horizon Salesforce is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, Salesforce is 8.46 times less risky than Korea Computer. The stock trades about -0.09 of its potential returns per unit of risk. The Korea Computer Systems is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 952,000 in Korea Computer Systems on October 26, 2024 and sell it today you would earn a total of 158,000 from holding Korea Computer Systems or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Salesforce vs. Korea Computer Systems
Performance |
| Timeline |
| Salesforce |
| Korea Computer Systems |
Salesforce and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Korea Computer
The main advantage of trading using opposite Salesforce and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Korea Computer vs. Iljin Display | Korea Computer vs. LG Chemicals | Korea Computer vs. DB Insurance Co | Korea Computer vs. Sangsin Energy Display |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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