Correlation Between Nano Labs and Silicon Laboratories

Can any of the company-specific risk be diversified away by investing in both Nano Labs and Silicon Laboratories 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 Nano Labs and Silicon Laboratories into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Nano Labs and Silicon Laboratories

0.44

Correlation Coefficient

Nano Labs  Silicon Laboratories

Very weak diversification

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

Pair Corralation between Nano Labs and Silicon Laboratories

Allowing for the 90-day total investment horizon Nano Labs is expected to generate 7.73 times more return on investment than Silicon Laboratories. However, Nano Labs is 7.73 times more volatile than Silicon Laboratories. It trades about 0.08 of its potential returns per unit of risk. Silicon Laboratories is currently generating about 0.07 per unit of risk. If you would invest  770.00  in Nano Labs on September 29, 2024 and sell it today you would earn a total of  5.00  from holding Nano Labs or generate 0.65% return on investment over 90 days.

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

Nano Labs  vs.  Silicon Laboratories

Nano Labs

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Labs are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nano Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

Silicon Laboratories

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silicon Laboratories are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Silicon Laboratories sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nano Labs and Silicon Laboratories

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

The idea behind Nano Labs and Silicon Laboratories 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.