Correlation Between Hon Hai and Salesforce
Can any of the company-specific risk be diversified away by investing in both Hon Hai and Salesforce 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 Hon Hai and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hon Hai Precision and Salesforce, you can compare the effects of market volatilities on Hon Hai and Salesforce 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 Hon Hai with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hon Hai and Salesforce.
Diversification Opportunities for Hon Hai and Salesforce
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hon and Salesforce is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Hon Hai Precision and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Hon Hai 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 Hon Hai Precision are associated (or correlated) with Salesforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salesforce has no effect on the direction of Hon Hai i.e., Hon Hai and Salesforce go up and down completely randomly.
Pair Corralation between Hon Hai and Salesforce
Assuming the 90 days trading horizon Hon Hai Precision is expected to under-perform the Salesforce. In addition to that, Hon Hai is 1.12 times more volatile than Salesforce. It trades about -0.11 of its total potential returns per unit of risk. Salesforce is currently generating about 0.27 per unit of volatility. If you would invest 26,870 in Salesforce on September 1, 2024 and sell it today you would earn a total of 4,535 from holding Salesforce or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hon Hai Precision vs. Salesforce
Performance |
| Timeline |
| Hon Hai Precision |
| Salesforce |
Hon Hai and Salesforce Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hon Hai and Salesforce
The main advantage of trading using opposite Hon Hai and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hon Hai position performs unexpectedly, Salesforce 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 Salesforce will offset losses from the drop in Salesforce's long position.The idea behind Hon Hai Precision and Salesforce 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.| Salesforce vs. SAP SE | Salesforce vs. Superior Plus Corp | Salesforce vs. NMI Holdings | Salesforce vs. Origin Agritech |
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.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stocks Directory Find actively traded stocks across global markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |