Correlation Between Semtech and Nano Labs

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

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

Diversification Opportunities for Semtech and Nano Labs

0.54

Correlation Coefficient

Semtech  Nano Labs

Very weak diversification

The 3 months correlation between Semtech and Nano is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and Nano Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Labs and Semtech 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 Semtech are associated (or correlated) with Nano Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Labs has no effect on the direction of Semtech i.e., Semtech and Nano Labs go up and down completely randomly.

Pair Corralation between Semtech and Nano Labs

Given the investment horizon of 90 days Semtech is expected to generate 0.48 times more return on investment than Nano Labs. However, Semtech is 2.09 times less risky than Nano Labs. It trades about 0.18 of its potential returns per unit of risk. Nano Labs is currently generating about 0.08 per unit of risk. If you would invest  5,344  in Semtech on September 26, 2024 and sell it today you would earn a total of  944.00  from holding Semtech or generate 17.66% return on investment over 90 days.

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

Semtech  vs.  Nano Labs

Semtech

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Semtech are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Semtech exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nano Labs

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Labs are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Nano Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semtech and Nano Labs

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

The idea behind Semtech and Nano Labs 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.