Correlation Between Nio and NexteGO NV
Can any of the company-specific risk be diversified away by investing in both Nio and NexteGO NV 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 Nio and NexteGO NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nio Class A and NexteGO NV Ordinary, you can compare the effects of market volatilities on Nio and NexteGO NV 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 Nio with a short position of NexteGO NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and NexteGO NV.
Diversification Opportunities for Nio and NexteGO NV
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nio and NexteGO is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and NexteGO NV Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexteGO NV Ordinary and Nio 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 Nio Class A are associated (or correlated) with NexteGO NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexteGO NV Ordinary has no effect on the direction of Nio i.e., Nio and NexteGO NV go up and down completely randomly.
Pair Corralation between Nio and NexteGO NV
Considering the 90-day investment horizon Nio Class A is expected to generate 0.13 times more return on investment than NexteGO NV. However, Nio Class A is 7.71 times less risky than NexteGO NV. It trades about -0.06 of its potential returns per unit of risk. NexteGO NV Ordinary is currently generating about -0.02 per unit of risk. If you would invest 1,457 in Nio Class A on August 26, 2024 and sell it today you would lose (973.00) from holding Nio Class A or give up 66.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.38% |
| Values | Daily Returns |
Nio Class A vs. NexteGO NV Ordinary
Performance |
| Timeline |
| Nio Class A |
| NexteGO NV Ordinary |
Nio and NexteGO NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nio and NexteGO NV
The main advantage of trading using opposite Nio and NexteGO NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio position performs unexpectedly, NexteGO NV 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 NexteGO NV will offset losses from the drop in NexteGO NV's long position.The idea behind Nio Class A and NexteGO NV Ordinary 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.| NexteGO NV vs. Nio Class A | NexteGO NV vs. Rivian Automotive | NexteGO NV vs. Lucid Group | NexteGO NV vs. Tesla Inc |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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