Correlation Between Tesla and REDSUN PROPERTIES

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

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

Diversification Opportunities for Tesla and REDSUN PROPERTIES

-0.42

Correlation Coefficient

Tesla  REDSUN PROPERTIES

Very good diversification

The 3 months correlation between Tesla and REDSUN is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and REDSUN PROPERTIES GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDSUN PROPERTIES and Tesla 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 Tesla Inc are associated (or correlated) with REDSUN PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDSUN PROPERTIES has no effect on the direction of Tesla i.e., Tesla and REDSUN PROPERTIES go up and down completely randomly.

Pair Corralation between Tesla and REDSUN PROPERTIES

Assuming the 90 days trading horizon Tesla Inc is expected to generate 0.33 times more return on investment than REDSUN PROPERTIES. However, Tesla Inc is 2.99 times less risky than REDSUN PROPERTIES. It trades about -0.03 of its potential returns per unit of risk. REDSUN PROPERTIES GROUP is currently generating about -0.12 per unit of risk. If you would invest  39,390  in Tesla Inc on October 12, 2024 and sell it today you would lose (1,370) from holding Tesla Inc or give up 3.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.44%
Values	Daily Returns

Tesla Inc  vs.  REDSUN PROPERTIES GROUP

Tesla Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Tesla unveiled solid returns over the last few months and may actually be approaching a breakup point.

REDSUN PROPERTIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REDSUN PROPERTIES GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Tesla and REDSUN PROPERTIES

The main advantage of trading using opposite Tesla and REDSUN PROPERTIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, REDSUN PROPERTIES 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 REDSUN PROPERTIES will offset losses from the drop in REDSUN PROPERTIES's long position.

The idea behind Tesla Inc and REDSUN PROPERTIES GROUP 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.