Correlation Between Salesforce and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both Salesforce and Merry Electronics 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 Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Merry Electronics Co, you can compare the effects of market volatilities on Salesforce and Merry Electronics 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 Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Merry Electronics.
Diversification Opportunities for Salesforce and Merry Electronics
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Salesforce and Merry is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics 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 Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of Salesforce i.e., Salesforce and Merry Electronics go up and down completely randomly.
Pair Corralation between Salesforce and Merry Electronics
Considering the 90-day investment horizon Salesforce is expected to generate 1.0 times more return on investment than Merry Electronics. However, Salesforce is 1.0 times more volatile than Merry Electronics Co. It trades about 0.08 of its potential returns per unit of risk. Merry Electronics Co is currently generating about 0.04 per unit of risk. If you would invest 21,953 in Salesforce on August 26, 2024 and sell it today you would earn a total of 12,249 from holding Salesforce or generate 55.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.9% |
| Values | Daily Returns |
Salesforce vs. Merry Electronics Co
Performance |
| Timeline |
| Salesforce |
| Merry Electronics |
Salesforce and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Merry Electronics
The main advantage of trading using opposite Salesforce and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Merry Electronics vs. Hunya Foods Co | Merry Electronics vs. Cathay Financial Holding | Merry Electronics vs. Asustek Computer | Merry Electronics vs. Taiwan Cooperative Financial |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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