Correlation Between Nano One and US Financial

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

By analyzing existing cross correlation between Nano One Materials and US Financial 15, you can compare the effects of market volatilities on Nano One and US Financial 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 One with a short position of US Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano One and US Financial.

Diversification Opportunities for Nano One and US Financial

-0.37

Correlation Coefficient

Nano One  US Financial

Very good diversification

The 3 months correlation between Nano and FTU-PB is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nano One Materials and US Financial 15 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Financial 15 and Nano One 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 One Materials are associated (or correlated) with US Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Financial 15 has no effect on the direction of Nano One i.e., Nano One and US Financial go up and down completely randomly.

Pair Corralation between Nano One and US Financial

Assuming the 90 days trading horizon Nano One Materials is expected to under-perform the US Financial. In addition to that, Nano One is 2.13 times more volatile than US Financial 15. It trades about -0.1 of its total potential returns per unit of risk. US Financial 15 is currently generating about 0.12 per unit of volatility. If you would invest  660.00  in US Financial 15 on September 28, 2024 and sell it today you would earn a total of  95.00  from holding US Financial 15 or generate 14.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Nano One Materials  vs.  US Financial 15

Nano One Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nano One Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

US Financial 15

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in US Financial 15 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, US Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nano One and US Financial

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

The idea behind Nano One Materials and US Financial 15 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.