Correlation Between Nanalysis Scientific and Sono Tek

Can any of the company-specific risk be diversified away by investing in both Nanalysis Scientific and Sono Tek 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 Nanalysis Scientific and Sono Tek into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nanalysis Scientific Corp and Sono Tek Corp, you can compare the effects of market volatilities on Nanalysis Scientific and Sono Tek 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 Nanalysis Scientific with a short position of Sono Tek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanalysis Scientific and Sono Tek.

Diversification Opportunities for Nanalysis Scientific and Sono Tek

-0.78

Correlation Coefficient

Nanalysis Scientific  Sono Tek

Pay attention - limited upside

The 3 months correlation between Nanalysis and Sono is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nanalysis Scientific Corp and Sono Tek Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sono Tek Corp and Nanalysis Scientific 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 Nanalysis Scientific Corp are associated (or correlated) with Sono Tek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sono Tek Corp has no effect on the direction of Nanalysis Scientific i.e., Nanalysis Scientific and Sono Tek go up and down completely randomly.

Pair Corralation between Nanalysis Scientific and Sono Tek

Assuming the 90 days horizon Nanalysis Scientific Corp is expected to under-perform the Sono Tek. In addition to that, Nanalysis Scientific is 2.47 times more volatile than Sono Tek Corp. It trades about -0.07 of its total potential returns per unit of risk. Sono Tek Corp is currently generating about 0.08 per unit of volatility. If you would invest  434.00  in Sono Tek Corp on September 12, 2024 and sell it today you would earn a total of  41.00  from holding Sono Tek Corp or generate 9.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Nanalysis Scientific Corp  vs.  Sono Tek Corp

Nanalysis Scientific Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanalysis Scientific Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sono Tek Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sono Tek Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Sono Tek may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nanalysis Scientific and Sono Tek

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

The idea behind Nanalysis Scientific Corp and Sono Tek Corp 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.