Correlation Between Nano One and Sika AG
Can any of the company-specific risk be diversified away by investing in both Nano One and Sika AG 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 One and Sika AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nano One Materials and Sika AG ADR, you can compare the effects of market volatilities on Nano One and Sika AG 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 One with a short position of Sika AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano One and Sika AG.
Diversification Opportunities for Nano One and Sika AG
Good diversification
The 3 months correlation between Nano and Sika is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Nano One Materials and Sika AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sika AG ADR and Nano One 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 One Materials are associated (or correlated) with Sika AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sika AG ADR has no effect on the direction of Nano One i.e., Nano One and Sika AG go up and down completely randomly.
Pair Corralation between Nano One and Sika AG
Assuming the 90 days horizon Nano One Materials is expected to under-perform the Sika AG. In addition to that, Nano One is 2.38 times more volatile than Sika AG ADR. It trades about -0.39 of its total potential returns per unit of risk. Sika AG ADR is currently generating about -0.42 per unit of volatility. If you would invest 2,900 in Sika AG ADR on August 28, 2024 and sell it today you would lose (315.00) from holding Sika AG ADR or give up 10.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nano One Materials vs. Sika AG ADR
Performance |
| Timeline |
| Nano One Materials |
| Sika AG ADR |
Nano One and Sika AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nano One and Sika AG
The main advantage of trading using opposite Nano One and Sika AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano One position performs unexpectedly, Sika AG 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 Sika AG will offset losses from the drop in Sika AG's long position.| Nano One vs. G6 Materials Corp | Nano One vs. Haydale Graphene Industries | Nano One vs. Orica Limited | Nano One vs. Johnson Matthey PLC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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