Correlation Between Park Ohio and Nano Nuclear

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

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

Diversification Opportunities for Park Ohio and Nano Nuclear

0.75

Correlation Coefficient

Park Ohio  Nano Nuclear

Poor diversification

The 3 months correlation between Park and Nano is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Nano Nuclear Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Nuclear Energy and Park Ohio 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 Park Ohio Holdings are associated (or correlated) with Nano Nuclear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Nuclear Energy has no effect on the direction of Park Ohio i.e., Park Ohio and Nano Nuclear go up and down completely randomly.

Pair Corralation between Park Ohio and Nano Nuclear

Given the investment horizon of 90 days Park Ohio is expected to generate 7.87 times less return on investment than Nano Nuclear. But when comparing it to its historical volatility, Park Ohio Holdings is 4.5 times less risky than Nano Nuclear. It trades about 0.07 of its potential returns per unit of risk. Nano Nuclear Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,523  in Nano Nuclear Energy on September 13, 2024 and sell it today you would earn a total of  887.00  from holding Nano Nuclear Energy or generate 58.24% return on investment over 90 days.

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

Park Ohio Holdings  vs.  Nano Nuclear Energy

Park Ohio Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Park Ohio Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Park Ohio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nano Nuclear Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Nuclear Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Nano Nuclear exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Park Ohio and Nano Nuclear

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

The idea behind Park Ohio Holdings and Nano Nuclear Energy 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 Transaction History module to view history of all your transactions and understand their impact on performance.