Correlation Between Tesla and Ambev SA

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

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

Diversification Opportunities for Tesla and Ambev SA

-0.9

Correlation Coefficient

Tesla  Ambev SA

Pay attention - limited upside

The 3 months correlation between Tesla and Ambev is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA 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 Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of Tesla i.e., Tesla and Ambev SA go up and down completely randomly.

Pair Corralation between Tesla and Ambev SA

Assuming the 90 days trading horizon Tesla Inc is expected to under-perform the Ambev SA. In addition to that, Tesla is 2.44 times more volatile than Ambev SA. It trades about -0.19 of its total potential returns per unit of risk. Ambev SA is currently generating about 0.21 per unit of volatility. If you would invest  3,819  in Ambev SA on December 21, 2024 and sell it today you would earn a total of  906.00  from holding Ambev SA or generate 23.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Tesla Inc  vs.  Ambev SA

Tesla Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tesla Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ambev SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Ambev SA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tesla and Ambev SA

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

The idea behind Tesla Inc and Ambev SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.