Correlation Between Nio and VinFast Auto

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

Diversification Opportunities for Nio and VinFast Auto

-0.44

Correlation Coefficient

Nio  VinFast Auto

Very good diversification

The 3 months correlation between Nio and VinFast is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and VinFast Auto Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VinFast Auto 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 VinFast Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VinFast Auto has no effect on the direction of Nio i.e., Nio and VinFast Auto go up and down completely randomly.

Pair Corralation between Nio and VinFast Auto

Considering the 90-day investment horizon Nio Class A is expected to under-perform the VinFast Auto. But the stock apears to be less risky and, when comparing its historical volatility, Nio Class A is 1.39 times less risky than VinFast Auto. The stock trades about -0.05 of its potential returns per unit of risk. The VinFast Auto Ltd is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  389.00  in VinFast Auto Ltd on September 12, 2024 and sell it today you would earn a total of  43.00  from holding VinFast Auto Ltd or generate 11.05% return on investment over 90 days.

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

Nio Class A  vs.  VinFast Auto Ltd

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 very healthy forward indicators, Nio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

VinFast Auto

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VinFast Auto Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, VinFast Auto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nio and VinFast Auto

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

The idea behind Nio Class A and VinFast Auto Ltd 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.