Correlation Between Nano and TNB

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

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

Diversification Opportunities for Nano and TNB

0.42

Correlation Coefficient

Nano  TNB

Very weak diversification

The 3 months correlation between Nano and TNB is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nano and TNB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TNB 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 TNB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TNB has no effect on the direction of Nano i.e., Nano and TNB go up and down completely randomly.

Pair Corralation between Nano and TNB

Assuming the 90 days trading horizon Nano is expected to generate 3.05 times more return on investment than TNB. However, Nano is 3.05 times more volatile than TNB. It trades about -0.01 of its potential returns per unit of risk. TNB is currently generating about -0.05 per unit of risk. If you would invest  125.00  in Nano on December 29, 2024 and sell it today you would lose (25.00) from holding Nano or give up 20.0% of portfolio value over 90 days.

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

Nano  vs.  TNB

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.

TNB

Risk-Adjusted Performance

Very Weak

Over the last 90 days TNB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for TNB shareholders.

Pair Trading with Nano and TNB

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

The idea behind Nano and TNB 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.