Correlation Between Honda and Niu Technologies
Can any of the company-specific risk be diversified away by investing in both Honda and Niu Technologies 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 Honda and Niu Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Honda Motor Co and Niu Technologies, you can compare the effects of market volatilities on Honda and Niu Technologies 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 Honda with a short position of Niu Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Honda and Niu Technologies.
Diversification Opportunities for Honda and Niu Technologies
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Honda and Niu is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Honda Motor Co and Niu Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niu Technologies and Honda 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 Honda Motor Co are associated (or correlated) with Niu Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niu Technologies has no effect on the direction of Honda i.e., Honda and Niu Technologies go up and down completely randomly.
Pair Corralation between Honda and Niu Technologies
Considering the 90-day investment horizon Honda Motor Co is expected to generate 0.36 times more return on investment than Niu Technologies. However, Honda Motor Co is 2.8 times less risky than Niu Technologies. It trades about 0.11 of its potential returns per unit of risk. Niu Technologies is currently generating about -0.09 per unit of risk. If you would invest 2,435 in Honda Motor Co on December 29, 2023 and sell it today you would earn a total of 1,276 from holding Honda Motor Co or generate 52.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Honda Motor Co vs. Niu Technologies
Performance |
Timeline |
Honda Motor |
Niu Technologies |
Honda and Niu Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Honda and Niu Technologies
The main advantage of trading using opposite Honda and Niu Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Honda position performs unexpectedly, Niu Technologies 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 Niu Technologies will offset losses from the drop in Niu Technologies' long position.Honda vs. Mobileye Global Class | Honda vs. Goodyear Tire Rubber | Honda vs. Quantumscape Corp | Honda vs. Visteon Corp |
Niu Technologies vs. Ford Motor | Niu Technologies vs. Mobileye Global Class | Niu Technologies vs. General Motors | Niu Technologies vs. Goodyear Tire Rubber |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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