Correlation Between Nano Labs and Photronics

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

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

Diversification Opportunities for Nano Labs and Photronics

0.37

Correlation Coefficient

Nano Labs  Photronics

Weak diversification

The 3 months correlation between Nano and Photronics is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nano Labs and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics 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 Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of Nano Labs i.e., Nano Labs and Photronics go up and down completely randomly.

Pair Corralation between Nano Labs and Photronics

Allowing for the 90-day total investment horizon Nano Labs is expected to generate 4.21 times more return on investment than Photronics. However, Nano Labs is 4.21 times more volatile than Photronics. It trades about 0.04 of its potential returns per unit of risk. Photronics is currently generating about 0.04 per unit of risk. If you would invest  1,280  in Nano Labs on September 26, 2024 and sell it today you would lose (381.00) from holding Nano Labs or give up 29.77% of portfolio value over 90 days.

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

Nano Labs  vs.  Photronics

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.

Photronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Photronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Photronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nano Labs and Photronics

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

The idea behind Nano Labs and Photronics 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..