Correlation Between Olympia Financial and Tesla

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

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

Diversification Opportunities for Olympia Financial and Tesla

0.87

Correlation Coefficient

Olympia Financial  Tesla

Very poor diversification

The 3 months correlation between Olympia and Tesla is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Olympia Financial Group 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 Olympia Financial 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 Olympia Financial Group 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 Olympia Financial i.e., Olympia Financial and Tesla go up and down completely randomly.

Pair Corralation between Olympia Financial and Tesla

Assuming the 90 days trading horizon Olympia Financial is expected to generate 2.1 times less return on investment than Tesla. But when comparing it to its historical volatility, Olympia Financial Group is 2.76 times less risky than Tesla. It trades about 0.24 of its potential returns per unit of risk. Tesla Inc CDR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,204  in Tesla Inc CDR on October 4, 2024 and sell it today you would earn a total of  478.00  from holding Tesla Inc CDR or generate 14.92% return on investment over 90 days.

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

Olympia Financial Group  vs.  Tesla Inc CDR

Olympia Financial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Olympia Financial Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Olympia Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 Olympia Financial and Tesla

The main advantage of trading using opposite Olympia Financial and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olympia Financial 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 Olympia Financial Group 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.