Correlation Between Salesforce and China Television

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

Diversification Opportunities for Salesforce and China Television

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Salesforce and China is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and China Television Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Television 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 China Television. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Television has no effect on the direction of Salesforce i.e., Salesforce and China Television go up and down completely randomly.

Pair Corralation between Salesforce and China Television

Considering the 90-day investment horizon Salesforce is expected to generate 1.23 times more return on investment than China Television. However, Salesforce is 1.23 times more volatile than China Television Co. It trades about 0.19 of its potential returns per unit of risk. China Television Co is currently generating about -0.36 per unit of risk. If you would invest  33,574  in Salesforce on October 31, 2024 and sell it today you would earn a total of  1,826  from holding Salesforce or generate 5.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy90.0%
ValuesDaily Returns

Salesforce  vs.  China Television Co

 Performance 
       Timeline  
Salesforce 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 12 (%) 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.
China Television 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days China Television Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in March 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Salesforce and China Television Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Salesforce and China Television

The main advantage of trading using opposite Salesforce and China Television positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, China Television 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 China Television will offset losses from the drop in China Television's long position.
The idea behind Salesforce and China Television Co 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.
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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