Correlation Between Hertz Global and Niu Technologies

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

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

Diversification Opportunities for Hertz Global and Niu Technologies

-0.73

Correlation Coefficient

Hertz Global  Niu Technologies

Pay attention - limited upside

The 3 months correlation between Hertz and Niu is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hertz Global Holdings and Niu Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niu Technologies and Hertz Global 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 Hertz Global Holdings 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 Hertz Global i.e., Hertz Global and Niu Technologies go up and down completely randomly.

Pair Corralation between Hertz Global and Niu Technologies

Considering the 90-day investment horizon Hertz Global Holdings is expected to under-perform the Niu Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Hertz Global Holdings is 1.17 times less risky than Niu Technologies. The stock trades about -0.16 of its potential returns per unit of risk. The Niu Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  169.00  in Niu Technologies on February 8, 2024 and sell it today you would earn a total of  66.00  from holding Niu Technologies or generate 39.05% return on investment over 90 days.

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

Hertz Global Holdings  vs.  Niu Technologies

Hertz Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hertz Global Holdings 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 basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

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 unfluctuating forward indicators, Niu Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hertz Global and Niu Technologies

The main advantage of trading using opposite Hertz Global and Niu Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hertz Global 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.

The idea behind Hertz Global Holdings and Niu Technologies 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 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.