Correlation Between Guangdong Investment and Tesla
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment 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 Guangdong Investment and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Tesla Inc, you can compare the effects of market volatilities on Guangdong Investment 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 Guangdong Investment with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Tesla.
Diversification Opportunities for Guangdong Investment and Tesla
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Tesla is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Guangdong Investment 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 Guangdong Investment Limited 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 Guangdong Investment i.e., Guangdong Investment and Tesla go up and down completely randomly.
Pair Corralation between Guangdong Investment and Tesla
Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the Tesla. In addition to that, Guangdong Investment is 1.24 times more volatile than Tesla Inc. It trades about -0.13 of its total potential returns per unit of risk. Tesla Inc is currently generating about -0.05 per unit of volatility. If you would invest 42,015 in Tesla Inc on October 25, 2024 and sell it today you would lose (1,510) from holding Tesla Inc or give up 3.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. Tesla Inc
Performance |
| Timeline |
| Guangdong Investment |
| Tesla Inc |
Guangdong Investment and Tesla Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and Tesla
The main advantage of trading using opposite Guangdong Investment and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment 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.| Guangdong Investment vs. American Water Works | Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Gelsenwasser AG | Guangdong Investment vs. American States Water |
| Tesla vs. Guangdong Investment Limited | Tesla vs. Playtech plc | Tesla vs. PKSHA TECHNOLOGY INC | Tesla vs. Sunny Optical Technology |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |