Correlation Between INDIKA ENERGY and Tesla

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

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

Diversification Opportunities for INDIKA ENERGY and Tesla

-0.83

Correlation Coefficient

INDIKA ENERGY  Tesla

Pay attention - limited upside

The 3 months correlation between INDIKA and Tesla is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and INDIKA ENERGY 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 INDIKA ENERGY 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 INDIKA ENERGY i.e., INDIKA ENERGY and Tesla go up and down completely randomly.

Pair Corralation between INDIKA ENERGY and Tesla

Assuming the 90 days trading horizon INDIKA ENERGY is expected to under-perform the Tesla. In addition to that, INDIKA ENERGY is 1.44 times more volatile than Tesla Inc. It trades about 0.0 of its total potential returns per unit of risk. Tesla Inc is currently generating about 0.09 per unit of volatility. If you would invest  11,004  in Tesla Inc on October 4, 2024 and sell it today you would earn a total of  29,526  from holding Tesla Inc or generate 268.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

INDIKA ENERGY  vs.  Tesla Inc

INDIKA ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDIKA ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Tesla Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Tesla unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with INDIKA ENERGY and Tesla

The main advantage of trading using opposite INDIKA ENERGY and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDIKA ENERGY 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 INDIKA ENERGY and Tesla Inc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.