Correlation Between Bion Environmental and Nio

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

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

Diversification Opportunities for Bion Environmental and Nio

0.91

Correlation Coefficient

Bion Environmental  Nio

Almost no diversification

The 3 months correlation between Bion and Nio is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bion Environmental Technologie 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 Bion Environmental 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 Bion Environmental Technologies 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 Bion Environmental i.e., Bion Environmental and Nio go up and down completely randomly.

Pair Corralation between Bion Environmental and Nio

Given the investment horizon of 90 days Bion Environmental Technologies is expected to generate 1.21 times more return on investment than Nio. However, Bion Environmental is 1.21 times more volatile than Nio Class A. It trades about -0.03 of its potential returns per unit of risk. Nio Class A is currently generating about -0.05 per unit of risk. If you would invest  147.00  in Bion Environmental Technologies on January 20, 2024 and sell it today you would lose (75.00) from holding Bion Environmental Technologies or give up 51.02% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.6%
Values	Daily Returns

Bion Environmental Technologie  vs.  Nio Class A

Bion Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bion Environmental Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private 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 May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bion Environmental and Nio

The main advantage of trading using opposite Bion Environmental and Nio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bion Environmental 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 Bion Environmental Technologies 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.