Correlation Between AXT and Nano Labs

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

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

Diversification Opportunities for AXT and Nano Labs

0.06

Correlation Coefficient

AXT  Nano Labs

Significant diversification

The 3 months correlation between AXT and Nano is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding AXT Inc and Nano Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Labs and AXT 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 AXT Inc are associated (or correlated) with Nano Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Labs has no effect on the direction of AXT i.e., AXT and Nano Labs go up and down completely randomly.

Pair Corralation between AXT and Nano Labs

Given the investment horizon of 90 days AXT Inc is expected to generate 0.37 times more return on investment than Nano Labs. However, AXT Inc is 2.67 times less risky than Nano Labs. It trades about -0.14 of its potential returns per unit of risk. Nano Labs is currently generating about -0.11 per unit of risk. If you would invest  231.00  in AXT Inc on October 14, 2024 and sell it today you would lose (18.00) from holding AXT Inc or give up 7.79% of portfolio value over 90 days.

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

AXT Inc  vs.  Nano Labs

AXT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Nano Labs

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Labs are ranked lower than 5 (%) 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.

Pair Trading with AXT and Nano Labs

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

The idea behind AXT Inc and Nano Labs 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.