Correlation Between SALESFORCE INC and China Southern

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

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

Diversification Opportunities for SALESFORCE INC and China Southern

0.04

Correlation Coefficient

SALESFORCE INC  China Southern

Significant diversification

The 3 months correlation between SALESFORCE and China is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SALESFORCE INC CDR and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines and SALESFORCE INC 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 INC CDR are associated (or correlated) with China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of SALESFORCE INC i.e., SALESFORCE INC and China Southern go up and down completely randomly.

Pair Corralation between SALESFORCE INC and China Southern

Assuming the 90 days trading horizon SALESFORCE INC CDR is expected to under-perform the China Southern. But the stock apears to be less risky and, when comparing its historical volatility, SALESFORCE INC CDR is 1.13 times less risky than China Southern. The stock trades about -0.13 of its potential returns per unit of risk. The China Southern Airlines is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  36.00  in China Southern Airlines on April 25, 2025 and sell it today you would earn a total of  4.00  from holding China Southern Airlines or generate 11.11% return on investment over 90 days.

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

SALESFORCE INC CDR  vs.  China Southern Airlines

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

China Southern Airlines

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Southern Airlines are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical indicators, China Southern may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SALESFORCE INC and China Southern

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

The idea behind SALESFORCE INC CDR and China Southern Airlines 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.