Correlation Between Nio Inc and Betapro Canadian

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

Diversification Opportunities for Nio Inc and Betapro Canadian

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nio Inc and Betapro is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nio Inc ADR and Betapro Canadian Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betapro Canadian Gold and Nio Inc 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 Inc ADR are associated (or correlated) with Betapro Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betapro Canadian Gold has no effect on the direction of Nio Inc i.e., Nio Inc and Betapro Canadian go up and down completely randomly.

Pair Corralation between Nio Inc and Betapro Canadian

Considering the 90-day investment horizon Nio Inc ADR is expected to under-perform the Betapro Canadian. In addition to that, Nio Inc is 1.06 times more volatile than Betapro Canadian Gold. It trades about -0.03 of its total potential returns per unit of risk. Betapro Canadian Gold is currently generating about -0.01 per unit of volatility. If you would invest  1,345  in Betapro Canadian Gold on April 4, 2022 and sell it today you would lose (274.00)  from holding Betapro Canadian Gold or give up 20.37% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy61.06%
ValuesDaily Returns

Nio Inc ADR  vs.  Betapro Canadian Gold

 Performance (%) 
      Timeline 
Nio Inc ADR 
Nio Inc Performance
0 of 100
Over the last 90 days Nio Inc ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Nio Inc is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Structure and Payout Changes

Dividend Date
2016-05-02

Nio Inc Price Channel

Betapro Canadian Gold 
Betapro Performance
0 of 100
Over the last 90 days Betapro Canadian Gold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Betapro Canadian is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Nio Inc and Betapro Canadian Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Nio Inc and Betapro Canadian

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

Nio Inc ADR

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Nio Inc as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Nio Inc's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Nio Inc's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Nio Inc ADR.
The idea behind Nio Inc ADR and Betapro Canadian Gold 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 Bond Directory module to find actively traded corporate debentures issued by US companies.

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