Correlation Between Baozun and Salesforce

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

Diversification Opportunities for Baozun and Salesforce

0.01
  Correlation Coefficient

Significant diversification

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

Pair Corralation between Baozun and Salesforce

Given the investment horizon of 90 days Baozun Inc is expected to under-perform the Salesforce. In addition to that, Baozun is 2.06 times more volatile than Salesforce. It trades about -0.05 of its total potential returns per unit of risk. Salesforce is currently generating about -0.02 per unit of volatility. If you would invest  23,893  in Salesforce on October 30, 2022 and sell it today you would lose (7,441)  from holding Salesforce or give up 31.14% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Baozun Inc  vs.  Salesforce

 Performance (%) 
       Timeline  
Baozun Inc 
Baozun Performance
15 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Baozun Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Baozun disclosed solid returns over the last few months and may actually be approaching a breakup point.

Baozun Price Channel

Salesforce 
Salesforce Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Salesforce are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady basic indicators, Salesforce is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Salesforce Price Channel

Baozun and Salesforce Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Baozun and Salesforce

The main advantage of trading using opposite Baozun and Salesforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baozun 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.
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The idea behind Baozun Inc 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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