Correlation Between Nio Inc and Picc Prop

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

Diversification Opportunities for Nio Inc and Picc Prop

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Nio Inc and PPCCF is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nio Inc ADR and Picc Prop Casualty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Picc Prop Casualty 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 Picc Prop. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Picc Prop Casualty has no effect on the direction of Nio Inc i.e., Nio Inc and Picc Prop go up and down completely randomly.

Pair Corralation between Nio Inc and Picc Prop

Considering the 90-day investment horizon Nio Inc ADR is expected to generate 2.87 times more return on investment than Picc Prop. However, Nio Inc is 2.87 times more volatile than Picc Prop Casualty. It trades about 0.04 of its potential returns per unit of risk. Picc Prop Casualty is currently generating about 0.04 per unit of risk. If you would invest  1,384  in Nio Inc ADR on April 4, 2022 and sell it today you would earn a total of  752.00  from holding Nio Inc ADR or generate 54.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.0%
ValuesDaily Returns

Nio Inc ADR  vs.  Picc Prop Casualty

 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

Picc Prop Casualty 
PPCCF Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Picc Prop Casualty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sluggish fundamental indicators, Picc Prop may actually be approaching a critical reversion point that can send shares even higher in August 2022.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0599
Payout Ratio
0.38
Last Split Factor
3:2
Forward Annual Dividend Rate
0.06
Dividend Date
2017-08-22
Ex Dividend Date
2022-06-23
Last Split Date
2018-06-27

PPCCF Price Channel

Nio Inc and Picc Prop Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Nio Inc and Picc Prop

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

Nio Inc ADR

Pair trading matchups for Nio Inc

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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 Picc Prop Casualty 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.

Picc Prop Casualty

Pair trading matchups for Picc Prop

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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