Correlation Between Tesla and Sable Resources

Can any of the company-specific risk be diversified away by investing in both Tesla and Sable Resources 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 Sable Resources 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 Sable Resources, you can compare the effects of market volatilities on Tesla and Sable Resources 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 Sable Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and Sable Resources.

Diversification Opportunities for Tesla and Sable Resources

-0.78

Correlation Coefficient

Tesla  Sable Resources

Pay attention - limited upside

The 3 months correlation between Tesla and Sable is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc CDR and Sable Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sable Resources 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 Sable Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sable Resources has no effect on the direction of Tesla i.e., Tesla and Sable Resources go up and down completely randomly.

Pair Corralation between Tesla and Sable Resources

Assuming the 90 days trading horizon Tesla Inc CDR is expected to generate 0.55 times more return on investment than Sable Resources. However, Tesla Inc CDR is 1.83 times less risky than Sable Resources. It trades about 0.1 of its potential returns per unit of risk. Sable Resources is currently generating about 0.02 per unit of risk. If you would invest  1,766  in Tesla Inc CDR on October 24, 2024 and sell it today you would earn a total of  2,084  from holding Tesla Inc CDR or generate 118.01% return on investment over 90 days.

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

Tesla Inc CDR  vs.  Sable Resources

Tesla Inc CDR

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 16 (%) 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.

Sable Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sable Resources is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Tesla and Sable Resources

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

The idea behind Tesla Inc CDR and Sable Resources 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.