Correlation Between Tesla and Starguide

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

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

Diversification Opportunities for Tesla and Starguide

0.37

Correlation Coefficient

Tesla  Starguide

Weak diversification

The 3 months correlation between Tesla and Starguide is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and Starguide Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Starguide Group 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 Starguide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Starguide Group has no effect on the direction of Tesla i.e., Tesla and Starguide go up and down completely randomly.

Pair Corralation between Tesla and Starguide

Given the investment horizon of 90 days Tesla Inc is expected to under-perform the Starguide. But the stock apears to be less risky and, when comparing its historical volatility, Tesla Inc is 35.51 times less risky than Starguide. The stock trades about -0.21 of its potential returns per unit of risk. The Starguide Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  4.16  in Starguide Group on December 21, 2024 and sell it today you would lose (3.97) from holding Starguide Group or give up 95.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Tesla Inc  vs.  Starguide 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.

Starguide Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Starguide Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Starguide reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tesla and Starguide

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

The idea behind Tesla Inc and Starguide 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.