Correlation Between Nano Dimension and Fabrinet

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

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

Diversification Opportunities for Nano Dimension and Fabrinet

-0.41

Correlation Coefficient

Nano Dimension  Fabrinet

Very good diversification

The 3 months correlation between Nano and Fabrinet is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nano Dimension and Fabrinet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fabrinet and Nano Dimension 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 Dimension are associated (or correlated) with Fabrinet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fabrinet has no effect on the direction of Nano Dimension i.e., Nano Dimension and Fabrinet go up and down completely randomly.

Pair Corralation between Nano Dimension and Fabrinet

Given the investment horizon of 90 days Nano Dimension is expected to under-perform the Fabrinet. But the stock apears to be less risky and, when comparing its historical volatility, Nano Dimension is 1.11 times less risky than Fabrinet. The stock trades about 0.0 of its potential returns per unit of risk. The Fabrinet is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12,886  in Fabrinet on October 24, 2024 and sell it today you would earn a total of  14,018  from holding Fabrinet or generate 108.78% return on investment over 90 days.

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

Nano Dimension  vs.  Fabrinet

Nano Dimension

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Dimension are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Nano Dimension is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Fabrinet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fabrinet has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Fabrinet is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nano Dimension and Fabrinet

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

The idea behind Nano Dimension and Fabrinet 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.