Correlation Between Context Therapeutics and Nio Inc

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Can any of the company-specific risk be diversified away by investing in both Context Therapeutics and Nio Inc 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 Context Therapeutics and Nio Inc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Context Therapeutics and Nio Inc ADR, you can compare the effects of market volatilities on Context Therapeutics and Nio Inc 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 Context Therapeutics with a short position of Nio Inc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Context Therapeutics and Nio Inc.

Diversification Opportunities for Context Therapeutics and Nio Inc

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Context and Nio Inc is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Context Therapeutics and Nio Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Inc ADR and Context Therapeutics 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 Context Therapeutics are associated (or correlated) with Nio Inc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Inc ADR has no effect on the direction of Context Therapeutics i.e., Context Therapeutics and Nio Inc go up and down completely randomly.

Pair Corralation between Context Therapeutics and Nio Inc

Given the investment horizon of 90 days Context Therapeutics is expected to under-perform the Nio Inc. In addition to that, Context Therapeutics is 1.14 times more volatile than Nio Inc ADR. It trades about -0.05 of its total potential returns per unit of risk. Nio Inc ADR is currently generating about -0.04 per unit of volatility. If you would invest  4,220  in Nio Inc ADR on May 10, 2022 and sell it today you would lose (2,203)  from holding Nio Inc ADR or give up 52.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Context Therapeutics  vs.  Nio Inc ADR

 Performance (%) 
       Timeline  
Context Therapeutics 
Context Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Context Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Context Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Context Price Channel

Nio Inc ADR 
Nio Inc Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nio Inc ADR are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward indicators, Nio Inc disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nio Inc Price Channel

Context Therapeutics and Nio Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Context Therapeutics and Nio Inc

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

Context Therapeutics

Pair trading matchups for Context Therapeutics

The idea behind Context Therapeutics and Nio Inc ADR 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.

Nio Inc ADR

Pair trading matchups for Nio 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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