Correlation Between NANO and Xai

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

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

Diversification Opportunities for NANO and Xai

0.6

Correlation Coefficient

NANO  Xai

Poor diversification

The 3 months correlation between NANO and Xai is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding NANO and Xai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xai and NANO 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 are associated (or correlated) with Xai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xai has no effect on the direction of NANO i.e., NANO and Xai go up and down completely randomly.

Pair Corralation between NANO and Xai

Assuming the 90 days trading horizon NANO is expected to generate 0.88 times more return on investment than Xai. However, NANO is 1.13 times less risky than Xai. It trades about 0.03 of its potential returns per unit of risk. Xai is currently generating about -0.09 per unit of risk. If you would invest  76.00  in NANO on August 23, 2024 and sell it today you would earn a total of  16.00  from holding NANO or generate 21.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	44.48%
Values	Daily Returns

NANO  vs.  Xai

NANO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NANO has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, NANO is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Xai

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Xai has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Xai is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NANO and Xai

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

The idea behind NANO and Xai 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.