Correlation Between Nano Labs and NVIDIA

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

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

Diversification Opportunities for Nano Labs and NVIDIA

0.11

Correlation Coefficient

Nano Labs  NVIDIA

Average diversification

The 3 months correlation between Nano and NVIDIA is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nano Labs and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA 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 NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of Nano Labs i.e., Nano Labs and NVIDIA go up and down completely randomly.

Pair Corralation between Nano Labs and NVIDIA

Allowing for the 90-day total investment horizon Nano Labs is expected to generate 9.43 times more return on investment than NVIDIA. However, Nano Labs is 9.43 times more volatile than NVIDIA. It trades about 0.24 of its potential returns per unit of risk. NVIDIA is currently generating about -0.14 per unit of risk. If you would invest  437.00  in Nano Labs on September 19, 2024 and sell it today you would earn a total of  490.00  from holding Nano Labs or generate 112.13% 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.  NVIDIA

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.

NVIDIA

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nano Labs and NVIDIA

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

The idea behind Nano Labs and NVIDIA 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.