Correlation Between Nio and Orient Overseas
Can any of the company-specific risk be diversified away by investing in both Nio and Orient Overseas 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 Orient Overseas 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 Orient Overseas Limited, you can compare the effects of market volatilities on Nio and Orient Overseas 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 Orient Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Orient Overseas.
Diversification Opportunities for Nio and Orient Overseas
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nio and Orient is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Orient Overseas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orient Overseas 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 Orient Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orient Overseas has no effect on the direction of Nio i.e., Nio and Orient Overseas go up and down completely randomly.
Pair Corralation between Nio and Orient Overseas
Considering the 90-day investment horizon Nio Class A is expected to generate 2.65 times more return on investment than Orient Overseas. However, Nio is 2.65 times more volatile than Orient Overseas Limited. It trades about -0.01 of its potential returns per unit of risk. Orient Overseas Limited is currently generating about -0.08 per unit of risk. If you would invest 534.00 in Nio Class A on August 30, 2024 and sell it today you would lose (96.00) from holding Nio Class A or give up 17.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nio Class A vs. Orient Overseas Limited
Performance |
| Timeline |
| Nio Class A |
| Orient Overseas |
Nio and Orient Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nio and Orient Overseas
The main advantage of trading using opposite Nio and Orient Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio position performs unexpectedly, Orient Overseas 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 Orient Overseas will offset losses from the drop in Orient Overseas' long position.The idea behind Nio Class A and Orient Overseas Limited 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.| Orient Overseas vs. SITC International Holdings | Orient Overseas vs. COSCO SHIPPING Holdings | Orient Overseas vs. Pacific Basin Shipping | Orient Overseas vs. Mitsui OSK Lines |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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