Question 1: When is it a better time to buy Nio stock - after a drop or after a rise?Answer:Consider two situations,Case 1: Nio stock drops by -5% or more in a monthCase 2: Nio stock rises by 5% or more in a month
NIO stock fares better after Case 2, with a 51.3% chance of rise over the next month (21 trading days) under Case 1 (where the stock has suffered a 5% loss over the previous month), versus, a 59.2% chance of rise for Case 2. This would suggest that it is better to buy NIO stock after a recent rise
Try the Trefis machine learning engine to see for yourself how Nio stock is likely to behave after any specific gain or loss over a period.
Question 2: Does Nio stock have a higher chance of rise after a steeper drop?Answer:Trefis machine learning engine's calculations show that for most stocks, the chance of rise reduces as the drop gets steeper. However, after unusually high declines of -10% or more, there is usually an improvement in the chance of rise. This makes sense intuitively, as markets often overreact to bad news around a company
For NIO stock, the probability of positive returns over the next month (21 trading days) after a drop of N% over the last 21 trading days is detailed in the table below, along with the positive return probability for the S&P500:
Previous 21 days% DropNext 21 daysPositive Return ProbabilityNIO S&P 500-1%50.0%71.1%-3%50.2%73.0%-5%51.3%72.7%-7.5%50.0%78.3%-10%49.8%78.4%
Question 3: What about Nio stock's chance of rise after a recent rally?
Answer:NIO's probability of positive returns over the next month (21 trading days) after a gain of N% over the last 21 trading days is detailed in the table below, along with the positive return probability for the S&P500:
Previous 21 days% RiseNext 21 daysPositive Return ProbabilityNIO S&P 500+1%58.4%67.8%+3%58.8%68.5%+5%59.2%67.0%+7.5%59.4%68.4%+10%60.1%74.2%