Correlation Between Ming Le and Salesforce

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

By analyzing existing cross correlation between Ming Le Sports and Salesforce, you can compare the effects of market volatilities on Ming Le 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 Ming Le with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Le and Salesforce.

Diversification Opportunities for Ming Le and Salesforce

0.61

Correlation Coefficient

Ming Le  Salesforce

Poor diversification

The 3 months correlation between Ming and Salesforce is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ming Le Sports and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Ming Le 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 Ming Le Sports 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 Ming Le i.e., Ming Le and Salesforce go up and down completely randomly.

Pair Corralation between Ming Le and Salesforce

Assuming the 90 days trading horizon Ming Le Sports is expected to generate 2.69 times more return on investment than Salesforce. However, Ming Le is 2.69 times more volatile than Salesforce. It trades about 0.23 of its potential returns per unit of risk. Salesforce is currently generating about 0.24 per unit of risk. If you would invest  100.00  in Ming Le Sports on September 5, 2024 and sell it today you would earn a total of  39.00  from holding Ming Le Sports or generate 39.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Ming Le Sports  vs.  Salesforce

Ming Le Sports

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ming Le Sports are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Ming Le unveiled solid returns over the last few months and may actually be approaching a breakup point.

Salesforce

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Salesforce unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ming Le and Salesforce

The main advantage of trading using opposite Ming Le and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ming Le 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 Ming Le Sports 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.