Correlation Between Salesforce and Li Ning
Can any of the company-specific risk be diversified away by investing in both Salesforce and Li Ning 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 Li Ning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salesforce and Li Ning Company, you can compare the effects of market volatilities on Salesforce and Li Ning 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 Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Li Ning.
Diversification Opportunities for Salesforce and Li Ning
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Salesforce and LNLB is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Li Ning Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Ning Company 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 Li Ning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Ning Company has no effect on the direction of Salesforce i.e., Salesforce and Li Ning go up and down completely randomly.
Pair Corralation between Salesforce and Li Ning
Considering the 90-day investment horizon Salesforce is expected to generate 0.74 times more return on investment than Li Ning. However, Salesforce is 1.35 times less risky than Li Ning. It trades about 0.25 of its potential returns per unit of risk. Li Ning Company is currently generating about 0.05 per unit of risk. If you would invest 29,472 in Salesforce on September 2, 2024 and sell it today you would earn a total of 3,527 from holding Salesforce or generate 11.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Salesforce vs. Li Ning Company
Performance |
| Timeline |
| Salesforce |
| Li Ning Company |
Salesforce and Li Ning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salesforce and Li Ning
The main advantage of trading using opposite Salesforce and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Li Ning 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 Li Ning will offset losses from the drop in Li Ning's long position.| Salesforce vs. Ke Holdings | Salesforce vs. nCino Inc | Salesforce vs. Kingsoft Cloud Holdings | Salesforce vs. Jfrog |
| Li Ning vs. Global Ship Lease | Li Ning vs. Perseus Mining Limited | Li Ning vs. Playtech plc | Li Ning vs. Uber Technologies |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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