Correlation Between Nio and Plug Power

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

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

Diversification Opportunities for Nio and Plug Power

0.62

Correlation Coefficient

Nio  Plug Power

Poor diversification

The 3 months correlation between Nio and Plug is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Plug Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plug Power and Nio 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 Nio Class A are associated (or correlated) with Plug Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plug Power has no effect on the direction of Nio i.e., Nio and Plug Power go up and down completely randomly.

Pair Corralation between Nio and Plug Power

Considering the 90-day investment horizon Nio is expected to generate 2.11 times less return on investment than Plug Power. But when comparing it to its historical volatility, Nio Class A is 1.82 times less risky than Plug Power. It trades about 0.09 of its potential returns per unit of risk. Plug Power is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  158.00  in Plug Power on August 19, 2025 and sell it today you would earn a total of  67.00  from holding Plug Power or generate 42.41% return on investment over 90 days.

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

Nio Class A  vs.  Plug Power

Nio Class A

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Nio Class A are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Nio displayed solid returns over the last few months and may actually be approaching a breakup point.

Plug Power

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Plug Power are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Plug Power reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nio and Plug Power

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

The idea behind Nio Class A and Plug Power 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.