Correlation Between Nano and PAY

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

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

Diversification Opportunities for Nano and PAY

0.09

Correlation Coefficient

Nano  PAY

Significant diversification

The 3 months correlation between Nano and PAY is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nano and PAY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAY and Nano 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 are associated (or correlated) with PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAY has no effect on the direction of Nano i.e., Nano and PAY go up and down completely randomly.

Pair Corralation between Nano and PAY

Assuming the 90 days trading horizon Nano is expected to under-perform the PAY. But the crypto coin apears to be less risky and, when comparing its historical volatility, Nano is 1.13 times less risky than PAY. The crypto coin trades about -0.01 of its potential returns per unit of risk. The PAY is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  0.65  in PAY on December 29, 2024 and sell it today you would lose (0.10) from holding PAY or give up 16.03% of portfolio value over 90 days.

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

Nano  vs.  PAY

Nano

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nano has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Nano is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

PAY

Risk-Adjusted Performance

Very Weak

Over the last 90 days PAY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PAY is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nano and PAY

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

The idea behind Nano and PAY 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 Commodity Directory module to find actively traded commodities issued by global exchanges.