Correlation Between ATT and Nio Inc

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

Diversification Opportunities for ATT and Nio Inc

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between ATT and Nio Inc is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc 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 ATT 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 ATT Inc 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 ATT i.e., ATT and Nio Inc go up and down completely randomly.

Pair Corralation between ATT and Nio Inc

Taking into account the 90-day investment horizon ATT Inc is expected to under-perform the Nio Inc. But the stock apears to be less risky and, when comparing its historical volatility, ATT Inc is 3.25 times less risky than Nio Inc. The stock trades about -0.07 of its potential returns per unit of risk. The Nio Inc ADR is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,310  in Nio Inc ADR on May 12, 2022 and sell it today you would earn a total of  695.00  from holding Nio Inc ADR or generate 53.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ATT Inc  vs.  Nio Inc ADR

 Performance (%) 
       Timeline  
ATT Inc 
ATT Performance
0 of 100
Over the last 90 days ATT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

ATT 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

ATT and Nio Inc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATT and Nio Inc

The main advantage of trading using opposite ATT and Nio Inc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT 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 ATT Inc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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