Correlation Between Tesla and China Southern
Can any of the company-specific risk be diversified away by investing in both Tesla and China Southern 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 China Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and China Southern Airlines, you can compare the effects of market volatilities on Tesla and China Southern 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 China Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and China Southern.
Diversification Opportunities for Tesla and China Southern
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tesla and China is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and China Southern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Southern Airlines 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 China Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Southern Airlines has no effect on the direction of Tesla i.e., Tesla and China Southern go up and down completely randomly.
Pair Corralation between Tesla and China Southern
If you would invest 32,849 in Tesla Inc on September 13, 2024 and sell it today you would earn a total of 9,628 from holding Tesla Inc or generate 29.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Tesla Inc vs. China Southern Airlines
Performance |
| Timeline |
| Tesla Inc |
| China Southern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tesla and China Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and China Southern
The main advantage of trading using opposite Tesla and China Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, China Southern 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 China Southern will offset losses from the drop in China Southern's long position.The idea behind Tesla Inc and China Southern Airlines 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.| China Southern vs. Tesla Inc | China Southern vs. Weibo Corp | China Southern vs. Grupo Televisa SAB | China Southern vs. Ziff Davis |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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