Correlation Between Salesforce and Lotes
Can any of the company-specific risk be diversified away by investing in both Salesforce and Lotes 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 Lotes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Lotes Co, you can compare the effects of market volatilities on Salesforce and Lotes 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 Lotes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Lotes.
Diversification Opportunities for Salesforce and Lotes
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Salesforce and Lotes is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Lotes Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotes 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 Lotes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotes has no effect on the direction of Salesforce i.e., Salesforce and Lotes go up and down completely randomly.
Pair Corralation between Salesforce and Lotes
Considering the 90-day investment horizon Salesforce is expected to generate 1.32 times less return on investment than Lotes. But when comparing it to its historical volatility, Salesforce is 1.44 times less risky than Lotes. It trades about 0.08 of its potential returns per unit of risk. Lotes Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 89,471 in Lotes Co on August 30, 2024 and sell it today you would earn a total of 75,529 from holding Lotes Co or generate 84.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.22% |
| Values | Daily Returns |
Salesforce vs. Lotes Co
Performance |
| Timeline |
| Salesforce |
| Lotes |
Salesforce and Lotes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Lotes
The main advantage of trading using opposite Salesforce and Lotes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Lotes 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 Lotes will offset losses from the drop in Lotes' long position.| Salesforce vs. Zoom Video Communications | Salesforce vs. C3 Ai Inc | Salesforce vs. Shopify | Salesforce vs. Workday |
| Lotes vs. Unimicron Technology Corp | Lotes vs. Alchip Technologies | Lotes vs. Nan Ya Printed | Lotes vs. Global Unichip 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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