Correlation Between Pinduoduo and Salesforce

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Can any of the company-specific risk be diversified away by investing in both Pinduoduo 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 Pinduoduo and Salesforce into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pinduoduo and Salesforce, you can compare the effects of market volatilities on Pinduoduo 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 Pinduoduo with a short position of Salesforce. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pinduoduo and Salesforce.

Diversification Opportunities for Pinduoduo and Salesforce

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Pinduoduo and Salesforce is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Pinduoduo and Salesforce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salesforce and Pinduoduo 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 Pinduoduo 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 Pinduoduo i.e., Pinduoduo and Salesforce go up and down completely randomly.

Pair Corralation between Pinduoduo and Salesforce

Considering the 90-day investment horizon Pinduoduo is expected to generate 1.24 times more return on investment than Salesforce. However, Pinduoduo is 1.24 times more volatile than Salesforce. It trades about 0.44 of its potential returns per unit of risk. Salesforce is currently generating about 0.0 per unit of risk. If you would invest  5,697  in Pinduoduo on September 4, 2022 and sell it today you would earn a total of  2,937  from holding Pinduoduo or generate 51.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.45%
ValuesDaily Returns

Pinduoduo  vs.  Salesforce

 Performance (%) 
       Timeline  
Pinduoduo 
Pinduoduo Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Pinduoduo are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Pinduoduo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pinduoduo Price Channel

Salesforce 
Salesforce Performance
0 of 100
Over the last 90 days Salesforce has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Salesforce is not utilizing all of its potentials. The newest stock price chaos, may contribute to medium-term losses for the stakeholders.

Salesforce Price Channel

Pinduoduo and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Pinduoduo and Salesforce

The main advantage of trading using opposite Pinduoduo and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinduoduo 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.
Pinduoduo vs. Carvana Co
The idea behind Pinduoduo 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.
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.

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