Correlation Between Niu Technologies and Mullen Automotive

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

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

Diversification Opportunities for Niu Technologies and Mullen Automotive

-0.47

Correlation Coefficient

Niu Technologies  Mullen Automotive

Very good diversification

The 3 months correlation between Niu and Mullen is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Niu Technologies and Mullen Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Automotive and Niu Technologies 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 Niu Technologies are associated (or correlated) with Mullen Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Automotive has no effect on the direction of Niu Technologies i.e., Niu Technologies and Mullen Automotive go up and down completely randomly.

Pair Corralation between Niu Technologies and Mullen Automotive

Considering the 90-day investment horizon Niu Technologies is expected to generate 1.74 times less return on investment than Mullen Automotive. But when comparing it to its historical volatility, Niu Technologies is 2.88 times less risky than Mullen Automotive. It trades about 0.14 of its potential returns per unit of risk. Mullen Automotive is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  400.00  in Mullen Automotive on February 5, 2024 and sell it today you would earn a total of  17.00  from holding Mullen Automotive or generate 4.25% return on investment over 90 days.

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

Niu Technologies  vs.  Mullen Automotive

Niu Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Niu Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward indicators, Niu Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mullen Automotive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mullen Automotive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Mullen Automotive is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Niu Technologies and Mullen Automotive

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

The idea behind Niu Technologies and Mullen Automotive 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 Global Correlations module to find global opportunities by holding instruments from different markets.