Mathematical analysis of co-relation between tesla and bitcoin during covid

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

Mathematical analysis of co-relation between tesla and bitcoin during covid

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Abstract this research paper summarizes a mathematical derivation stating the co relation between the share of tesla and bitcoin. The derivation has been shown below by means of a formula and the graphs for the same have been presented too. The correlation between the stock and crypto is positive giving us the conclusion that these two are inter related. Data has been taken from 2019 to 2022 to analyze the relation pre covid, during covid as well as post covid.

INTRODUCTION

Warren Buffet once said “Price is what you pay, value is what you get.” As we delve deep into this famous quote, we understand the need of regular inflows of cash in our daily lives. The trying times of 2020, famously known as the covid phasehaveledto skyrocketing ratesofinflation throughouttheworld.Duringthe covidtimes,passiveincome became a boon for many and a bane for some too. Passive income can be generated in many ways, the stock market and cryptocurrenciesbeingtwoeasymoneymakingmodes.Althoughbothofthesemodesareextremelyunpredictable,ifthe timeandcircumstancesarefavorable,therecouldbeaboostinshareandstockprices.Intoday’sworldalmosteveryother laymanhassomekindofgeneralknowledgeaboutthefinancialmarket.Ihavepreparedaresearchstatementinorderto understandthecorrelationbetweenthestockmarketandthecryptocurrenciesduringcovidtimes.ForthisIhavetaken upthefamousbillionaireElonMusk’s‘Teslashare’andthefirstevercryptocurrencytobecreated‘TheBitcoin’.

THE MATHEMATICAL ANALYSIS OF CORRELATION BETWEEN BITCOIN AND TESLA BY MEANS OF GRAPHS AND EQUATIONS.

AmathematicalequationhasbeenderivedwiththeaimtounderstandwhetherthevariationofstockpricesofTeslahave been similar to the rates of bitcoin. The aim of this paper is to give readers an idea whether future assumptions can be madeaboutbitcoinpricesbysimultaneouslylookingattheTeslaprices.Throughthisanalysis,wecanalsogetaclearidea abouttheeffectthatthecoronavirushashadonbothcryptosandthestockmarket.

THE FINANCIAL MARKET

The financial market is like a deep hole with never ending opportunities. It is so vast that even if one studies it for a lifetime,hisknowledgeisonlytoalimitedextent.Onecanneverfullyunderstandorpredictwhatwillhappennext.While therearemillionsofundiscoveredshares,thatonlya fewknowabout, there are some thatare in thelimelightthanksto theexcellentresultsandperformanceoftheircompanies.Thehistoryofthemodernstockmarketgoesbacktothe1600’s whenthestockoftheDutchEastIndiaCompanywaspubliclytradedinordertoraisecapitalforthelattercompany.After this,intheyear1611,theAmsterdamStockExchangewascreated.Eversincethen,aboutfourcenturieslater,todaythere areaboutsixtystockexchangesintheworld,theNYSEandBSEtonameafew.

CRYTOCURRENCY

A crypto currency is a digitally created currency which does not involve any government participation. It is a form of virtualcurrencywhichcanbepurchasedviacryptowallets.Cryptocurrencyhasextremepricefluctuations,sinceitisnot reliant on the government and has no ceiling. Bitcoin was the first ever crypto currency to be created. Only within a few yearsofitslaunch,Bitcoinhadcreatedaverygoodnameforitself.Italsocreatedapathforfuturepotentialcryptos.Now, there are approximately 18000 cryptocurrencies. Bitcoin, Ethereum and Tether are amongst some of the most famous currencies.

TESLA

TeslaisanAmericancompanythatdealsinautomobilesandcleanenergy.Itisfamousforitselectricvehicles.Theshares ofTeslafirstenteredthemarketonJune29th,2010.TheywerelaunchedinNASDAQatthepriceofseventeendollarsper share.Today,thepriceofTeslashareshasrisentoabout738dollarspershare(ason28thJune,2022).Theseshareshave providedinvestorswithskyrocketingreturnsduringcovidtimes.ThegraphforTeslasharesisquitepositive.

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

WHY I CHOSE THIS SHARE?

The share of Tesla has been in the market for about a decade now. It has provided excellent results to investors with a graphgrowingupwards.Forchoosingthisshare,Itookbitcoinasthebaseandthencomparedthegraphofbitcointothat of a few shares. While apple failed in providing a definite co1relation, both Tesla and Facebook were showing positive results. After comparing the two, Tesla started to seem exactly like I wanted the graph to be. The co relation was easily calculablebymeansofformulas.ThisencouragedmetouseTeslaasmyunitforcomparison.

BITCOIN

Bitcoinwascreatedintheyear2008byauserorgroupofusersbythenameofSatoshiNakamoto.Theimplementationof this currency was started in 2009. Since then, bitcoin has risen and crashed a large number of times leading to heavy lossesaswellasextremeprofitstotraders.Thisisoneofthemosttradedcryptocurrencieswithmillionsoftradersacross theworld.Itsriskyyetquickreturnsexcitenewinvestorsandtheygetattractedseeingthescopeforlifechangingprofits

WHY I CHOSE BITCOIN?

Bitcoin is an extremely popular crypto currency that has been in the market for about two decades now. The aim of my paperistofindaco relationbetweendifferentfinancialtools.Sowhilechoosingacryptocurrency,BitcoinandEthereum, bothcametomymind.ButsinceBitcoinhasalargerrateoffluctuation,alargermarketcapitalisationandisbetterknown as compared to Ethereum, I realised that it would be more convenient for people to relate to it. Below is a chart showcasingthemarketcapitalisationofvariouscryptos.

CRYPTO

BITCOIN ETHEREUM OTHER CURRENCIES

Methodology

Inordertoderivethegraphsandequationsoftheco relationbetweenTeslaandBitcoin,variousstepshavebeenfollowed.

Step1Firstly,allthevaluesofbothTeslaandBitcoinweresortedinatabularformkeepinginmindthemonthsaswellas theyears.AllthemonthlypricesfromJanuary2019toJune2022taken.BelowaretablesshowingvaluesofTeslashares

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

Month 2019 2020 2021 2022

January 62.024 86.052 729.77 1199.78 February 62.442 156 839.81 931.25 March 58.958 148.724 718.43 864.37 April 57.836 96.312 661.75 1084.59 May 46.802 140.264 684.9 902.94 June 35.794 179.62 623.9 740.37 july 45.434 223.926 677.92 August 46.77 297 709.67 September 45.002 475.05 734.79 October 48.938 448.16 775.22 November 62.662 400.51 1208.59 December 66.974 584.76 1095

Month 2019 2020 2021 2022

January 3869.47 7188.46 29391.78 47743 February 3468.25 9388.66 33543.77 38718.81 March 3850.07 8540.26 49619.64 44438.34 April 4156.39 6671.95 58726.68 46154.50 May 5423.06 8771.57 57836.01 37923.81 June 8553.13 9564.95 36681.74 31451.50 July 10577.33 9153.95 33524.98 August 10404.21 11354.16 39882.39 September 9773.34 11964.21 48840.96 October 8326.58 10626.60 48162.71 November 9265.43 13762.97 60955.77 December 7420.84 18795.20 57238.62

Tableforbitcoin

Step2Graphswerethenframedaccordingtotheseunits.Graph1depictsthecourseofTeslashares,whilegraph2shows thefluctuationinbitcoinprices.Afterlookingatthetwoshares,anothergraphwascreatedbothmanuallyandusingexcel. Thishelpedtocreateaclearideaaboutthefluctuationinpricesoftwoshares.

Step3Westudiesvarioustypesofgraphs,namelylinear,quadratic,powerandexponentialgraphs.Whilethequadratic graphwasquitesimilar,theexponentialgraphgaveamoreaccuratevalue.

Step4Wehavenowbeenabletocalculatetheco relationbetweenpricesofTeslaandBitcoinbyusingthetechniquesof correlationandregression.

FORMULA FOR CO RELATION

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

Graph1

Table1depictsgraphof Teslain

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

Table2depictsthegraphofbitcoininRed

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056 Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

Graph4

LINEAREQUATION

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

QUADRATICEQUATION Graph5

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

CALCULATIONUSING FORMULA (WORKING)

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

International Research Journal of Engineering and Technology (IRJET) e ISSN: 2395 0056

Volume: 09 Issue: 07 | July 2022 www.irjet.net p ISSN: 2395 0072

Conclusion

In this paper, I tried to fit two types of regression equations. One is a strait line equation and the other is a quadratic equation. Though both the graphs show very close positive results, the quadratic graphs shows a more accurate relation between Tesla and bitcoin prices. Also, the positive value of r depicts a strong relationship between Tesla and bitcoin. We can conclude that a hike in one may depict a hike in the other. Therefore, they are inter related. I have rounded off certain values as all the values are very large. My research to study a relationship between two different types of investable tools has been fruitful.

THE MOTIVATION BEHIND THIS TOPIC

I have had an interest in finance ever since I was a kid. Discussions about the stock market made me really curious. It became my aim to create a career in finance. As time passed by, I started understanding the various divisions of finance. I first got introduced to the stock market and then to crypto currencies. With such an avid interest, I realised that I wanted to create something in this field. My passion drove me towards creating a research paper about two globally recognised financial tools, shares and cryptos. Throughout this paper, I applied my knowledge in order to provide a detailed analysis on the topic and help readers to collect all valuable necessary information. I have used various graphs and pie charts to summarise the paper in a comprehensive manner and provide readers with a clear view about the sea changes that have taken place in the market since covid. Through my paper, readers will be able to understand the fluctuating nature of the market as well as the course of inflows and outflows of cash

BIBLIOGRAPHY

https://www.nasdaq.com https://statisticshowto.com https://www.investopedia.com https://economictimes.indiatimes.com

THIS PROJECT HAS BEEN MADE BY:

Rhea Khosla

Class XI

Currently, a student of Welham Girls’ School Dehradun, India Scored 98.6% in Semester 1 Board Exams of ICSE, Second topper of her previous School and of Ludhiana District.

Under the guidance of: Dr Mamta Jain

PhD (Mathematics)

M.Sc(Mathematics) M.Phil(computer applications) from University of Roorkee (now IIT Roorkee)

5 papers published in International journals Former Lead Author ISO 9001 ISO 22000

School Accreditation Examiner by QCI M Sc Double Gold Medalist.