Correlation Between Hua Hong and SALESFORCE INC

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

By analyzing existing cross correlation between Hua Hong Semiconductor and SALESFORCE INC CDR, you can compare the effects of market volatilities on Hua Hong and SALESFORCE INC 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 Hua Hong with a short position of SALESFORCE INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Hong and SALESFORCE INC.

Diversification Opportunities for Hua Hong and SALESFORCE INC

-0.29

Correlation Coefficient

Hua Hong  SALESFORCE INC

Very good diversification

The 3 months correlation between Hua and SALESFORCE is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Hua Hong Semiconductor and SALESFORCE INC CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SALESFORCE INC CDR and Hua Hong 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 Hua Hong Semiconductor are associated (or correlated) with SALESFORCE INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SALESFORCE INC CDR has no effect on the direction of Hua Hong i.e., Hua Hong and SALESFORCE INC go up and down completely randomly.

Pair Corralation between Hua Hong and SALESFORCE INC

Assuming the 90 days horizon Hua Hong Semiconductor is expected to generate 1.31 times more return on investment than SALESFORCE INC. However, Hua Hong is 1.31 times more volatile than SALESFORCE INC CDR. It trades about -0.01 of its potential returns per unit of risk. SALESFORCE INC CDR is currently generating about -0.02 per unit of risk. If you would invest  418.00  in Hua Hong Semiconductor on April 20, 2025 and sell it today you would lose (24.00) from holding Hua Hong Semiconductor or give up 5.74% of portfolio value over 90 days.

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

Hua Hong Semiconductor  vs.  SALESFORCE INC CDR

Hua Hong Semiconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hua Hong Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hua Hong is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SALESFORCE INC CDR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SALESFORCE INC CDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SALESFORCE INC is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hua Hong and SALESFORCE INC

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

The idea behind Hua Hong Semiconductor and SALESFORCE INC CDR 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.