Correlation Between Sika AG and Nano One
Can any of the company-specific risk be diversified away by investing in both Sika AG 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 Sika AG and Nano One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG and Nano One Materials, you can compare the effects of market volatilities on Sika AG 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 Sika AG with a short position of Nano One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Nano One.
Diversification Opportunities for Sika AG and Nano One
Good diversification
The 3 months correlation between Sika and Nano is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Sika AG 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 Sika AG 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 Sika AG 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 Sika AG i.e., Sika AG and Nano One go up and down completely randomly.
Pair Corralation between Sika AG and Nano One
Assuming the 90 days horizon Sika AG is expected to generate 0.95 times more return on investment than Nano One. However, Sika AG is 1.05 times less risky than Nano One. It trades about -0.09 of its potential returns per unit of risk. Nano One Materials is currently generating about -0.39 per unit of risk. If you would invest 28,179 in Sika AG on August 28, 2024 and sell it today you would lose (1,657) from holding Sika AG or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sika AG vs. Nano One Materials
Performance |
| Timeline |
| Sika AG |
| Nano One Materials |
Sika AG and Nano One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and Nano One
The main advantage of trading using opposite Sika AG and Nano One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG 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 Sika AG 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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