Correlation Between Intchains Group and NLIGHT

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

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

Diversification Opportunities for Intchains Group and NLIGHT

-0.33

Correlation Coefficient

Intchains Group  NLIGHT

Very good diversification

The 3 months correlation between Intchains and NLIGHT is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Intchains Group Limited and nLIGHT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nLIGHT Inc and Intchains Group 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 Intchains Group Limited are associated (or correlated) with NLIGHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nLIGHT Inc has no effect on the direction of Intchains Group i.e., Intchains Group and NLIGHT go up and down completely randomly.

Pair Corralation between Intchains Group and NLIGHT

Considering the 90-day investment horizon Intchains Group Limited is expected to generate 2.14 times more return on investment than NLIGHT. However, Intchains Group is 2.14 times more volatile than nLIGHT Inc. It trades about 0.02 of its potential returns per unit of risk. nLIGHT Inc is currently generating about 0.01 per unit of risk. If you would invest  800.00  in Intchains Group Limited on October 4, 2024 and sell it today you would lose (374.00) from holding Intchains Group Limited or give up 46.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.53%
Values	Daily Returns

Intchains Group Limited  vs.  nLIGHT Inc

Intchains Group

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intchains Group Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Intchains Group reported solid returns over the last few months and may actually be approaching a breakup point.

nLIGHT Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days nLIGHT Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, NLIGHT is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Intchains Group and NLIGHT

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

The idea behind Intchains Group Limited and nLIGHT Inc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.