Correlation Between Salesforce and Hong Ho
Can any of the company-specific risk be diversified away by investing in both Salesforce and Hong Ho 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 Hong Ho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Hong Ho Precision, you can compare the effects of market volatilities on Salesforce and Hong Ho 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 Hong Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Hong Ho.
Diversification Opportunities for Salesforce and Hong Ho
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Salesforce and Hong is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Hong Ho Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hong Ho Precision 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 Hong Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hong Ho Precision has no effect on the direction of Salesforce i.e., Salesforce and Hong Ho go up and down completely randomly.
Pair Corralation between Salesforce and Hong Ho
Considering the 90-day investment horizon Salesforce is expected to generate 1.76 times less return on investment than Hong Ho. But when comparing it to its historical volatility, Salesforce is 1.34 times less risky than Hong Ho. It trades about 0.25 of its potential returns per unit of risk. Hong Ho Precision is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 4,450 in Hong Ho Precision on September 2, 2024 and sell it today you would earn a total of 1,030 from holding Hong Ho Precision or generate 23.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Salesforce vs. Hong Ho Precision
Performance |
| Timeline |
| Salesforce |
| Hong Ho Precision |
Salesforce and Hong Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Hong Ho
The main advantage of trading using opposite Salesforce and Hong Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Hong Ho 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 Hong Ho will offset losses from the drop in Hong Ho's long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
| Hong Ho vs. Everest Textile Co | Hong Ho vs. Hong Yi Fiber | Hong Ho vs. Yi Jinn Industrial | Hong Ho vs. Carnival Industrial Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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