Correlation Between Nano Dimension and Desktop Metal

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

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

Diversification Opportunities for Nano Dimension and Desktop Metal

-0.42

Correlation Coefficient

Nano Dimension  Desktop Metal

Very good diversification

The 3 months correlation between Nano and Desktop is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nano Dimension and Desktop Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Desktop Metal and Nano Dimension 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 Dimension are associated (or correlated) with Desktop Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Desktop Metal has no effect on the direction of Nano Dimension i.e., Nano Dimension and Desktop Metal go up and down completely randomly.

Pair Corralation between Nano Dimension and Desktop Metal

Given the investment horizon of 90 days Nano Dimension is expected to under-perform the Desktop Metal. In addition to that, Nano Dimension is 1.14 times more volatile than Desktop Metal. It trades about -0.14 of its total potential returns per unit of risk. Desktop Metal is currently generating about 0.49 per unit of volatility. If you would invest  452.00  in Desktop Metal on January 24, 2025 and sell it today you would earn a total of  44.00  from holding Desktop Metal or generate 9.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	31.82%
Values	Daily Returns

Nano Dimension  vs.  Desktop Metal

Nano Dimension

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nano Dimension has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Desktop Metal

Risk-Adjusted Performance

Good

Over the last 90 days Desktop Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating primary indicators, Desktop Metal displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nano Dimension and Desktop Metal

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

The idea behind Nano Dimension and Desktop Metal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.