Correlation Between Tesla and Sare Holding

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

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

Diversification Opportunities for Tesla and Sare Holding

0.0

Correlation Coefficient

Tesla  Sare Holding

Pay attention - limited upside

The 3 months correlation between Tesla and Sare is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Sare Holding SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sare Holding SAB 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 Sare Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sare Holding SAB has no effect on the direction of Tesla i.e., Tesla and Sare Holding go up and down completely randomly.

Pair Corralation between Tesla and Sare Holding

If you would invest  490,108  in Tesla Inc on September 24, 2024 and sell it today you would earn a total of  364,525  from holding Tesla Inc or generate 74.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Tesla Inc  vs.  Sare Holding SAB

Tesla Inc

Risk-Adjusted Performance

16 of 100

Solid

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

Sare Holding SAB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sare Holding SAB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Sare Holding is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Tesla and Sare Holding

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

The idea behind Tesla Inc and Sare Holding SAB 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.