Correlation Between Nio Inc and Omnia Wellness

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Can any of the company-specific risk be diversified away by investing in both Nio Inc and Omnia Wellness 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 Omnia Wellness 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 Omnia Wellness, you can compare the effects of market volatilities on Nio Inc and Omnia Wellness 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 Omnia Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio Inc and Omnia Wellness.

Diversification Opportunities for Nio Inc and Omnia Wellness

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nio Inc and Omnia is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nio Inc ADR and Omnia Wellness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia Wellness 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 Omnia Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Wellness has no effect on the direction of Nio Inc i.e., Nio Inc and Omnia Wellness go up and down completely randomly.

Pair Corralation between Nio Inc and Omnia Wellness

Considering the 90-day investment horizon Nio Inc ADR is expected to generate 0.15 times more return on investment than Omnia Wellness. However, Nio Inc ADR is 6.77 times less risky than Omnia Wellness. It trades about 0.04 of its potential returns per unit of risk. Omnia Wellness is currently generating about 0.0 per unit of risk. If you would invest  2,072  in Nio Inc ADR on May 16, 2022 and sell it today you would earn a total of  39.00  from holding Nio Inc ADR or generate 1.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nio Inc ADR  vs.  Omnia Wellness

 Performance (%) 
       Timeline  
Nio Inc ADR 
Nio Inc Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nio Inc ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish forward indicators, Nio Inc disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nio Inc Price Channel

Omnia Wellness 
Omnia Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Omnia Wellness are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively sluggish basic indicators, Omnia Wellness reported solid returns over the last few months and may actually be approaching a breakup point.

Omnia Price Channel

Nio Inc and Omnia Wellness Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nio Inc and Omnia Wellness

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

Nio Inc ADR

Pair trading matchups for Nio Inc

The idea behind Nio Inc ADR and Omnia Wellness 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.

Omnia Wellness

Pair trading matchups for Omnia Wellness

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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