Correlation Between Nano Labs and Go Solar

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

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

Diversification Opportunities for Nano Labs and Go Solar

0.0

Correlation Coefficient

Nano Labs  Go Solar

Pay attention - limited upside

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

Pair Corralation between Nano Labs and Go Solar

Allowing for the 90-day total investment horizon Nano Labs is expected to generate 2.96 times less return on investment than Go Solar. But when comparing it to its historical volatility, Nano Labs is 3.81 times less risky than Go Solar. It trades about 0.05 of its potential returns per unit of risk. Go Solar USA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  0.01  in Go Solar USA on September 18, 2024 and sell it today you would lose (0.01) from holding Go Solar USA or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nano Labs  vs.  Go Solar USA

Nano Labs

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Labs are ranked lower than 12 (%) 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.

Go Solar USA

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Go Solar USA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Go Solar is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nano Labs and Go Solar

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

The idea behind Nano Labs and Go Solar USA 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.