Correlation Between Tianjin Capital and Tesla

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

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

Diversification Opportunities for Tianjin Capital and Tesla

0.36

Correlation Coefficient

Tianjin Capital  Tesla

Weak diversification

The 3 months correlation between Tianjin and Tesla is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Tianjin Capital Environmental and Tesla Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc and Tianjin Capital 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 Tianjin Capital Environmental 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 Tianjin Capital i.e., Tianjin Capital and Tesla go up and down completely randomly.

Pair Corralation between Tianjin Capital and Tesla

Assuming the 90 days horizon Tianjin Capital Environmental is expected to generate 1.37 times more return on investment than Tesla. However, Tianjin Capital is 1.37 times more volatile than Tesla Inc. It trades about 0.07 of its potential returns per unit of risk. Tesla Inc is currently generating about 0.05 per unit of risk. If you would invest  17.00  in Tianjin Capital Environmental on October 4, 2024 and sell it today you would earn a total of  23.00  from holding Tianjin Capital Environmental or generate 135.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.7%
Values	Daily Returns

Tianjin Capital Environmental  vs.  Tesla Inc

Tianjin Capital Envi

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tianjin Capital Environmental are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tianjin Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tesla Inc

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 15 (%) 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 Tianjin Capital and Tesla

The main advantage of trading using opposite Tianjin Capital and Tesla positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tianjin Capital 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 Tianjin Capital Environmental 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.