Correlation Between Thunder Power and Tesla
Can any of the company-specific risk be diversified away by investing in both Thunder Power and Tesla 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 Thunder Power and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thunder Power Holdings, and Tesla Inc, you can compare the effects of market volatilities on Thunder Power and Tesla 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 Thunder Power with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thunder Power and Tesla.
Diversification Opportunities for Thunder Power and Tesla
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Thunder and Tesla is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Thunder Power Holdings, and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Thunder Power 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 Thunder Power Holdings, are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc has no effect on the direction of Thunder Power i.e., Thunder Power and Tesla go up and down completely randomly.
Pair Corralation between Thunder Power and Tesla
Given the investment horizon of 90 days Thunder Power Holdings, is expected to under-perform the Tesla. In addition to that, Thunder Power is 2.36 times more volatile than Tesla Inc. It trades about -0.1 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.06 per unit of volatility. If you would invest 23,974 in Tesla Inc on September 4, 2024 and sell it today you would earn a total of 11,168 from holding Tesla Inc or generate 46.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thunder Power Holdings, vs. Tesla Inc
Performance |
| Timeline |
| Thunder Power Holdings, |
| Tesla Inc |
Thunder Power and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thunder Power and Tesla
The main advantage of trading using opposite Thunder Power and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thunder Power position performs unexpectedly, Tesla 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 Tesla will offset losses from the drop in Tesla's long position.| Thunder Power vs. Corporacion America Airports | Thunder Power vs. Porvair plc | Thunder Power vs. Cebu Air ADR | Thunder Power vs. Chemours Co |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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