Correlation Between Quantum and Nano Dimension

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

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

Diversification Opportunities for Quantum and Nano Dimension

0.58

Correlation Coefficient

Quantum  Nano Dimension

Very weak diversification

The 3 months correlation between Quantum and Nano is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Quantum and Nano Dimension in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Dimension and Quantum 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 Quantum are associated (or correlated) with Nano Dimension. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Dimension has no effect on the direction of Quantum i.e., Quantum and Nano Dimension go up and down completely randomly.

Pair Corralation between Quantum and Nano Dimension

Given the investment horizon of 90 days Quantum is expected to under-perform the Nano Dimension. In addition to that, Quantum is 3.79 times more volatile than Nano Dimension. It trades about -0.11 of its total potential returns per unit of risk. Nano Dimension is currently generating about -0.18 per unit of volatility. If you would invest  268.00  in Nano Dimension on December 25, 2024 and sell it today you would lose (95.50) from holding Nano Dimension or give up 35.63% of portfolio value over 90 days.

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

Quantum  vs.  Nano Dimension

Quantum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nano Dimension

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nano Dimension has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Quantum and Nano Dimension

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

The idea behind Quantum and Nano Dimension 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.