Correlation Between Tesla and WiMi Hologram

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

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

Diversification Opportunities for Tesla and WiMi Hologram

-0.15

Correlation Coefficient

Tesla  WiMi Hologram

Good diversification

The 3 months correlation between Tesla and WiMi is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and WiMi Hologram Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiMi Hologram Cloud 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 WiMi Hologram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiMi Hologram Cloud has no effect on the direction of Tesla i.e., Tesla and WiMi Hologram go up and down completely randomly.

Pair Corralation between Tesla and WiMi Hologram

Given the investment horizon of 90 days Tesla Inc is expected to generate 1.47 times more return on investment than WiMi Hologram. However, Tesla is 1.47 times more volatile than WiMi Hologram Cloud. It trades about 0.26 of its potential returns per unit of risk. WiMi Hologram Cloud is currently generating about -0.06 per unit of risk. If you would invest  25,755  in Tesla Inc on August 31, 2024 and sell it today you would earn a total of  7,534  from holding Tesla Inc or generate 29.25% return on investment over 90 days.

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

Tesla Inc  vs.  WiMi Hologram Cloud

Tesla Inc

Risk-Adjusted Performance

13 of 100

Good

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

WiMi Hologram Cloud

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WiMi Hologram Cloud are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak primary indicators, WiMi Hologram demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tesla and WiMi Hologram

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

The idea behind Tesla Inc and WiMi Hologram Cloud 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.