Correlation Between NanoTech Gaming and Montana Technologies

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

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

Diversification Opportunities for NanoTech Gaming and Montana Technologies

0.0

Correlation Coefficient

NanoTech Gaming  Montana Technologies

Pay attention - limited upside

The 3 months correlation between NanoTech and Montana is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NanoTech Gaming and Montana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montana Technologies and NanoTech Gaming 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 NanoTech Gaming are associated (or correlated) with Montana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montana Technologies has no effect on the direction of NanoTech Gaming i.e., NanoTech Gaming and Montana Technologies go up and down completely randomly.

Pair Corralation between NanoTech Gaming and Montana Technologies

Given the investment horizon of 90 days NanoTech Gaming is expected to generate 6.2 times more return on investment than Montana Technologies. However, NanoTech Gaming is 6.2 times more volatile than Montana Technologies. It trades about 0.04 of its potential returns per unit of risk. Montana Technologies is currently generating about -0.05 per unit of risk. If you would invest  0.02  in NanoTech Gaming on October 4, 2024 and sell it today you would lose (0.01) from holding NanoTech Gaming or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	41.45%
Values	Daily Returns

NanoTech Gaming  vs.  Montana Technologies

NanoTech Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NanoTech Gaming has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, NanoTech Gaming is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Montana Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Montana Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Montana Technologies revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NanoTech Gaming and Montana Technologies

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

The idea behind NanoTech Gaming and Montana Technologies 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.