Correlation Between Salesforce and Hanmi Financial

Can any of the company-specific risk be diversified away by investing in both Salesforce and Hanmi Financial 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 Hanmi Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Salesforce and Hanmi Financial, you can compare the effects of market volatilities on Salesforce and Hanmi Financial 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 Hanmi Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salesforce and Hanmi Financial.

Diversification Opportunities for Salesforce and Hanmi Financial

0.89

Correlation Coefficient

Salesforce  Hanmi Financial

Very poor diversification

The 3 months correlation between Salesforce and Hanmi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Salesforce and Hanmi Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanmi Financial 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 Hanmi Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanmi Financial has no effect on the direction of Salesforce i.e., Salesforce and Hanmi Financial go up and down completely randomly.

Pair Corralation between Salesforce and Hanmi Financial

Considering the 90-day investment horizon Salesforce is expected to generate 1.18 times less return on investment than Hanmi Financial. But when comparing it to its historical volatility, Salesforce is 1.53 times less risky than Hanmi Financial. It trades about 0.27 of its potential returns per unit of risk. Hanmi Financial is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,924  in Hanmi Financial on August 31, 2024 and sell it today you would earn a total of  751.00  from holding Hanmi Financial or generate 39.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Salesforce  vs.  Hanmi Financial

Salesforce

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 21 (%) 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.

Hanmi Financial

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hanmi Financial are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical and fundamental indicators, Hanmi Financial exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Salesforce and Hanmi Financial

The main advantage of trading using opposite Salesforce and Hanmi Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salesforce position performs unexpectedly, Hanmi Financial 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 Hanmi Financial will offset losses from the drop in Hanmi Financial's long position.

The idea behind Salesforce and Hanmi Financial 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.