Correlation Between FTC Solar and Nano Labs

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

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

Diversification Opportunities for FTC Solar and Nano Labs

-0.49

Correlation Coefficient

FTC Solar  Nano Labs

Very good diversification

The 3 months correlation between FTC and Nano is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding FTC Solar and Nano Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Labs and FTC Solar 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 FTC Solar 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 FTC Solar i.e., FTC Solar and Nano Labs go up and down completely randomly.

Pair Corralation between FTC Solar and Nano Labs

Given the investment horizon of 90 days FTC Solar is expected to generate 8.05 times less return on investment than Nano Labs. But when comparing it to its historical volatility, FTC Solar is 1.36 times less risky than Nano Labs. It trades about 0.01 of its potential returns per unit of risk. Nano Labs is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,420  in Nano Labs on September 26, 2024 and sell it today you would lose (521.00) from holding Nano Labs or give up 36.69% of portfolio value over 90 days.

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

FTC Solar  vs.  Nano Labs

FTC Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FTC Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Nano Labs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Labs are ranked lower than 8 (%) 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 FTC Solar and Nano Labs

The main advantage of trading using opposite FTC Solar and Nano Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTC Solar 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 FTC Solar 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.