Correlation Between Tesla and Sun Hung
Can any of the company-specific risk be diversified away by investing in both Tesla and Sun Hung 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 Tesla and Sun Hung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and Sun Hung Kai, you can compare the effects of market volatilities on Tesla and Sun Hung 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 Tesla with a short position of Sun Hung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Sun Hung.
Diversification Opportunities for Tesla and Sun Hung
Pay attention - limited upside
The 3 months correlation between Tesla and Sun is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Sun Hung Kai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Hung Kai and Tesla 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 Tesla Inc are associated (or correlated) with Sun Hung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Hung Kai has no effect on the direction of Tesla i.e., Tesla and Sun Hung go up and down completely randomly.
Pair Corralation between Tesla and Sun Hung
Given the investment horizon of 90 days Tesla Inc is expected to generate 2.42 times more return on investment than Sun Hung. However, Tesla is 2.42 times more volatile than Sun Hung Kai. It trades about 0.06 of its potential returns per unit of risk. Sun Hung Kai is currently generating about -0.04 per unit of risk. If you would invest 19,464 in Tesla Inc on November 2, 2024 and sell it today you would earn a total of 22,465 from holding Tesla Inc or generate 115.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesla Inc vs. Sun Hung Kai
Performance |
| Timeline |
| Tesla Inc |
| Sun Hung Kai |
Tesla and Sun Hung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and Sun Hung
The main advantage of trading using opposite Tesla and Sun Hung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, Sun Hung 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 Sun Hung will offset losses from the drop in Sun Hung's long position.The idea behind Tesla Inc and Sun Hung Kai 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.| Sun Hung vs. Hong Kong Land | Sun Hung vs. Wharf Holdings | Sun Hung vs. Holiday Island Holdings | Sun Hung vs. Bayport International Holdings |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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