Correlation Between Nano Labs and Indie Semiconductor

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

By analyzing existing cross correlation between Nano Labs and indie Semiconductor, you can compare the effects of market volatilities on Nano Labs and Indie Semiconductor 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 Indie Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano Labs and Indie Semiconductor.

Diversification Opportunities for Nano Labs and Indie Semiconductor

0.17

Correlation Coefficient

Nano Labs  Indie Semiconductor

Average diversification

The 3 months correlation between Nano and Indie is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nano Labs and indie Semiconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on indie Semiconductor 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 Indie Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of indie Semiconductor has no effect on the direction of Nano Labs i.e., Nano Labs and Indie Semiconductor go up and down completely randomly.

Pair Corralation between Nano Labs and Indie Semiconductor

Allowing for the 90-day total investment horizon Nano Labs is expected to generate 2.5 times more return on investment than Indie Semiconductor. However, Nano Labs is 2.5 times more volatile than indie Semiconductor. It trades about 0.1 of its potential returns per unit of risk. indie Semiconductor is currently generating about -0.01 per unit of risk. If you would invest  418.00  in Nano Labs on September 27, 2024 and sell it today you would earn a total of  481.00  from holding Nano Labs or generate 115.07% return on investment over 90 days.

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

Nano Labs  vs.  indie Semiconductor

Nano Labs

Risk-Adjusted Performance

5 of 100

OK

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.

indie Semiconductor

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nano Labs and Indie Semiconductor

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

The idea behind Nano Labs and indie Semiconductor 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.