Correlation Between Andrew Peller and Tesla

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

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

Diversification Opportunities for Andrew Peller and Tesla

-0.31

Correlation Coefficient

Andrew Peller  Tesla

Very good diversification

The 3 months correlation between Andrew and Tesla is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Andrew Peller Limited and Tesla Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tesla Inc CDR and Andrew Peller 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 Andrew Peller Limited are associated (or correlated) with Tesla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tesla Inc CDR has no effect on the direction of Andrew Peller i.e., Andrew Peller and Tesla go up and down completely randomly.

Pair Corralation between Andrew Peller and Tesla

Assuming the 90 days trading horizon Andrew Peller Limited is expected to under-perform the Tesla. But the stock apears to be less risky and, when comparing its historical volatility, Andrew Peller Limited is 3.51 times less risky than Tesla. The stock trades about 0.0 of its potential returns per unit of risk. The Tesla Inc CDR is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,280  in Tesla Inc CDR on September 21, 2024 and sell it today you would earn a total of  1,557  from holding Tesla Inc CDR or generate 68.29% return on investment over 90 days.

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

Andrew Peller Limited  vs.  Tesla Inc CDR

Andrew Peller Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Andrew Peller Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Andrew Peller is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Tesla Inc CDR

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tesla Inc CDR are ranked lower than 15 (%) 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.

Pair Trading with Andrew Peller and Tesla

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

The idea behind Andrew Peller Limited and Tesla Inc CDR 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.