Correlation Between Tesla and Caravelle International

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

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

Diversification Opportunities for Tesla and Caravelle International

0.73

Correlation Coefficient

Tesla  Caravelle International

Poor diversification

The 3 months correlation between Tesla and Caravelle is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle International 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 Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of Tesla i.e., Tesla and Caravelle International go up and down completely randomly.

Pair Corralation between Tesla and Caravelle International

Given the investment horizon of 90 days Tesla Inc is expected to generate 0.4 times more return on investment than Caravelle International. However, Tesla Inc is 2.49 times less risky than Caravelle International. It trades about -0.13 of its potential returns per unit of risk. Caravelle International Group is currently generating about -0.1 per unit of risk. If you would invest  41,741  in Tesla Inc on December 29, 2024 and sell it today you would lose (14,428) from holding Tesla Inc or give up 34.57% of portfolio value over 90 days.

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

Tesla Inc  vs.  Caravelle International Group

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. Despite abnormal performance in the last few months, the Stock's essential indicators remain somewhat 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.

Caravelle International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caravelle International Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tesla and Caravelle International

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

The idea behind Tesla Inc and Caravelle International 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.