Correlation Between Envirotech Vehicles and Nio

Can any of the company-specific risk be diversified away by investing in both Envirotech Vehicles and Nio 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 Envirotech Vehicles and Nio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Envirotech Vehicles and Nio Class A, you can compare the effects of market volatilities on Envirotech Vehicles and Nio 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 Envirotech Vehicles with a short position of Nio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Envirotech Vehicles and Nio.

Diversification Opportunities for Envirotech Vehicles and Nio

0.59

Correlation Coefficient

Envirotech Vehicles  Nio

Very weak diversification

The 3 months correlation between Envirotech and Nio is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Envirotech Vehicles and Nio Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nio Class A and Envirotech Vehicles 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 Envirotech Vehicles are associated (or correlated) with Nio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nio Class A has no effect on the direction of Envirotech Vehicles i.e., Envirotech Vehicles and Nio go up and down completely randomly.

Pair Corralation between Envirotech Vehicles and Nio

Given the investment horizon of 90 days Envirotech Vehicles is expected to under-perform the Nio. But the stock apears to be less risky and, when comparing its historical volatility, Envirotech Vehicles is 1.04 times less risky than Nio. The stock trades about -0.15 of its potential returns per unit of risk. The Nio Class A is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  629.00  in Nio Class A on October 9, 2024 and sell it today you would lose (158.00) from holding Nio Class A or give up 25.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Envirotech Vehicles  vs.  Nio Class A

Envirotech Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Envirotech Vehicles has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Nio Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nio Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Envirotech Vehicles and Nio

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

The idea behind Envirotech Vehicles and Nio Class A 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 the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.