Correlation Between Eastwood Bio-Medical and Tesla

Can any of the company-specific risk be diversified away by investing in both Eastwood Bio-Medical 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 Eastwood Bio-Medical and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eastwood Bio Medical Canada and Tesla Inc CDR, you can compare the effects of market volatilities on Eastwood Bio-Medical 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 Eastwood Bio-Medical with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastwood Bio-Medical and Tesla.

Diversification Opportunities for Eastwood Bio-Medical and Tesla

0.17

Correlation Coefficient

Eastwood Bio-Medical  Tesla

Average diversification

The 3 months correlation between Eastwood and Tesla is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Eastwood Bio Medical Canada and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR and Eastwood Bio-Medical 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 Eastwood Bio Medical Canada 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 CDR has no effect on the direction of Eastwood Bio-Medical i.e., Eastwood Bio-Medical and Tesla go up and down completely randomly.

Pair Corralation between Eastwood Bio-Medical and Tesla

Assuming the 90 days horizon Eastwood Bio Medical Canada is expected to generate 3.92 times more return on investment than Tesla. However, Eastwood Bio-Medical is 3.92 times more volatile than Tesla Inc CDR. It trades about 0.06 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.06 per unit of risk. If you would invest  86.00  in Eastwood Bio Medical Canada on September 2, 2024 and sell it today you would lose (11.00) from holding Eastwood Bio Medical Canada or give up 12.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Eastwood Bio Medical Canada  vs.  Tesla Inc CDR

Eastwood Bio Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eastwood Bio Medical Canada are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eastwood Bio-Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Tesla Inc CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eastwood Bio-Medical and Tesla

The main advantage of trading using opposite Eastwood Bio-Medical and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastwood Bio-Medical 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.

The idea behind Eastwood Bio Medical Canada and Tesla Inc CDR 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.