Correlation Between Nano Labs and GSI Technology

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

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

Diversification Opportunities for Nano Labs and GSI Technology

0.74

Correlation Coefficient

Nano Labs  GSI Technology

Poor diversification

The 3 months correlation between Nano and GSI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nano Labs and GSI Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSI Technology and Nano Labs 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 Labs are associated (or correlated) with GSI Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSI Technology has no effect on the direction of Nano Labs i.e., Nano Labs and GSI Technology go up and down completely randomly.

Pair Corralation between Nano Labs and GSI Technology

Allowing for the 90-day total investment horizon Nano Labs is expected to generate 1.72 times less return on investment than GSI Technology. But when comparing it to its historical volatility, Nano Labs is 1.05 times less risky than GSI Technology. It trades about 0.03 of its potential returns per unit of risk. GSI Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  154.00  in GSI Technology on August 22, 2024 and sell it today you would earn a total of  116.00  from holding GSI Technology or generate 75.32% return on investment over 90 days.

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

Nano Labs  vs.  GSI Technology

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 fragile basic indicators, Nano Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

GSI Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GSI Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, GSI Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Nano Labs and GSI Technology

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

The idea behind Nano Labs and GSI Technology 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.