Correlation Between Cadence Design and NanoTech Gaming

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

By analyzing existing cross correlation between Cadence Design Systems and NanoTech Gaming, you can compare the effects of market volatilities on Cadence Design and NanoTech Gaming 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 Cadence Design with a short position of NanoTech Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cadence Design and NanoTech Gaming.

Diversification Opportunities for Cadence Design and NanoTech Gaming

0.0

Correlation Coefficient

Cadence Design  NanoTech Gaming

Pay attention - limited upside

The 3 months correlation between Cadence and NanoTech is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cadence Design Systems and NanoTech Gaming in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NanoTech Gaming and Cadence Design 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 Cadence Design Systems are associated (or correlated) with NanoTech Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NanoTech Gaming has no effect on the direction of Cadence Design i.e., Cadence Design and NanoTech Gaming go up and down completely randomly.

Pair Corralation between Cadence Design and NanoTech Gaming

If you would invest  27,103  in Cadence Design Systems on September 30, 2024 and sell it today you would earn a total of  3,400  from holding Cadence Design Systems or generate 12.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.97%
Values	Daily Returns

Cadence Design Systems  vs.  NanoTech Gaming

Cadence Design Systems

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cadence Design Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cadence Design unveiled solid returns over the last few months and may actually be approaching a breakup point.

NanoTech Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NanoTech Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, NanoTech Gaming is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Cadence Design and NanoTech Gaming

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

The idea behind Cadence Design Systems and NanoTech Gaming 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.