Correlation Between Olin and Nano One
Can any of the company-specific risk be diversified away by investing in both Olin and Nano One 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 Olin and Nano One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Olin Corporation and Nano One Materials, you can compare the effects of market volatilities on Olin and Nano One 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 Olin with a short position of Nano One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Olin and Nano One.
Diversification Opportunities for Olin and Nano One
Very weak diversification
The 3 months correlation between Olin and Nano is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Olin Corp. and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials and Olin 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 Olin Corporation are associated (or correlated) with Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of Olin i.e., Olin and Nano One go up and down completely randomly.
Pair Corralation between Olin and Nano One
Considering the 90-day investment horizon Olin Corporation is expected to generate 0.39 times more return on investment than Nano One. However, Olin Corporation is 2.59 times less risky than Nano One. It trades about -0.06 of its potential returns per unit of risk. Nano One Materials is currently generating about -0.1 per unit of risk. If you would invest 5,279 in Olin Corporation on August 28, 2024 and sell it today you would lose (920.00) from holding Olin Corporation or give up 17.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Olin Corp. vs. Nano One Materials
Performance |
| Timeline |
| Olin |
| Nano One Materials |
Olin and Nano One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Olin and Nano One
The main advantage of trading using opposite Olin and Nano One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Olin position performs unexpectedly, Nano One 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 One will offset losses from the drop in Nano One's long position.The idea behind Olin Corporation and Nano One Materials 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.| 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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