Correlation Between Tesla and Amotiv

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

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

Diversification Opportunities for Tesla and Amotiv

-0.8

Correlation Coefficient

Tesla  Amotiv

Pay attention - limited upside

The 3 months correlation between Tesla and Amotiv is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Amotiv Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amotiv Limited 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 CDR are associated (or correlated) with Amotiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amotiv Limited has no effect on the direction of Tesla i.e., Tesla and Amotiv go up and down completely randomly.

Pair Corralation between Tesla and Amotiv

Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 2.28 times more return on investment than Amotiv. However, Tesla is 2.28 times more volatile than Amotiv Limited. It trades about 0.06 of its potential returns per unit of risk. Amotiv Limited is currently generating about 0.02 per unit of risk. If you would invest  1,697  in Tesla Inc CDR on October 5, 2024 and sell it today you would earn a total of  1,761  from holding Tesla Inc CDR or generate 103.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Tesla Inc CDR  vs.  Amotiv Limited

Tesla Inc CDR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, Tesla exhibited solid returns over the last few months and may actually be approaching a breakup point.

Amotiv Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amotiv Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Tesla and Amotiv

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

The idea behind Tesla Inc CDR and Amotiv Limited 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.