Correlation Between Perficient and Nio Inc

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

Diversification Opportunities for Perficient and Nio Inc

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Perficient and Nio Inc is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Perficient 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 Perficient 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 Perficient 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 Perficient i.e., Perficient and Nio Inc go up and down completely randomly.

Pair Corralation between Perficient and Nio Inc

Given the investment horizon of 90 days Perficient is expected to generate 0.46 times more return on investment than Nio Inc. However, Perficient is 2.18 times less risky than Nio Inc. It trades about 0.09 of its potential returns per unit of risk. Nio Inc ADR is currently generating about 0.04 per unit of risk. If you would invest  3,336  in Perficient on April 4, 2022 and sell it today you would earn a total of  5,689  from holding Perficient or generate 170.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Perficient  vs.  Nio Inc ADR

 Performance (%) 
      Timeline 
Perficient 
Perficient Performance
0 of 100
Over the last 90 days Perficient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in August 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Perficient Price Channel

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

Perficient and Nio Inc Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Perficient and Nio Inc

The main advantage of trading using opposite Perficient and Nio Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perficient 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.
The idea behind Perficient 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

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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.
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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