Correlation Between Nio and Titan Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Nio and Titan Pharmaceuticals 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 Titan Pharmaceuticals 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 Titan Pharmaceuticals, you can compare the effects of market volatilities on Nio and Titan Pharmaceuticals 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 Titan Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Titan Pharmaceuticals.

Diversification Opportunities for Nio and Titan Pharmaceuticals

-0.26

Correlation Coefficient

Nio  Titan Pharmaceuticals

Very good diversification

The 3 months correlation between Nio and Titan is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Titan Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Pharmaceuticals 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 Titan Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Pharmaceuticals has no effect on the direction of Nio i.e., Nio and Titan Pharmaceuticals go up and down completely randomly.

Pair Corralation between Nio and Titan Pharmaceuticals

Considering the 90-day investment horizon Nio Class A is expected to under-perform the Titan Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Nio Class A is 1.12 times less risky than Titan Pharmaceuticals. The stock trades about -0.04 of its potential returns per unit of risk. The Titan Pharmaceuticals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,964  in Titan Pharmaceuticals on January 19, 2024 and sell it today you would lose (1,254) from holding Titan Pharmaceuticals or give up 63.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.73%
Values	Daily Returns

Nio Class A  vs.  Titan Pharmaceuticals

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.

Titan Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Titan Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Titan Pharmaceuticals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nio and Titan Pharmaceuticals

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

The idea behind Nio Class A and Titan Pharmaceuticals 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.