Correlation Between 360 Finance and Tesla

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Can any of the company-specific risk be diversified away by investing in both 360 Finance 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 360 Finance and Tesla into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 360 Finance and Tesla Inc, you can compare the effects of market volatilities on 360 Finance 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 360 Finance with a short position of Tesla. Check out your portfolio center. Please also check ongoing floating volatility patterns of 360 Finance and Tesla.

Diversification Opportunities for 360 Finance and Tesla

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between 360 and Tesla is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding 360 Finance and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and 360 Finance 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 360 Finance 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 360 Finance i.e., 360 Finance and Tesla go up and down completely randomly.

Pair Corralation between 360 Finance and Tesla

Given the investment horizon of 90 days 360 Finance is expected to generate 2.2 times less return on investment than Tesla. But when comparing it to its historical volatility, 360 Finance is 1.78 times less risky than Tesla. It trades about 0.14 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  33,480  in Tesla Inc on October 5, 2024 and sell it today you would earn a total of  3,790  from holding Tesla Inc or generate 11.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy85.0%
ValuesDaily Returns

360 Finance  vs.  Tesla Inc

 Performance 
       Timeline  
360 Finance 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in 360 Finance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, 360 Finance displayed solid returns over the last few months and may actually be approaching a breakup point.
Tesla Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Solid
Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Tesla unveiled solid returns over the last few months and may actually be approaching a breakup point.

360 Finance and Tesla Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with 360 Finance and Tesla

The main advantage of trading using opposite 360 Finance and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 360 Finance 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 360 Finance 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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