Correlation Between Nano Labs and ASE Industrial

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

By analyzing existing cross correlation between Nano Labs and ASE Industrial Holding, you can compare the effects of market volatilities on Nano Labs and ASE Industrial 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 ASE Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano Labs and ASE Industrial.

Diversification Opportunities for Nano Labs and ASE Industrial

0.07

Correlation Coefficient

Nano Labs  ASE Industrial

Significant diversification

The 3 months correlation between Nano and ASE is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nano Labs and ASE Industrial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASE Industrial Holding 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 ASE Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASE Industrial Holding has no effect on the direction of Nano Labs i.e., Nano Labs and ASE Industrial go up and down completely randomly.

Pair Corralation between Nano Labs and ASE Industrial

Allowing for the 90-day total investment horizon Nano Labs is expected to generate 4.98 times more return on investment than ASE Industrial. However, Nano Labs is 4.98 times more volatile than ASE Industrial Holding. It trades about 0.1 of its potential returns per unit of risk. ASE Industrial Holding is currently generating about 0.01 per unit of risk. If you would invest  54.00  in Nano Labs on February 17, 2024 and sell it today you would earn a total of  7.00  from holding Nano Labs or generate 12.96% return on investment over 90 days.

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

Nano Labs  vs.  ASE Industrial Holding

Nano Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nano Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the ETF investors.

ASE Industrial Holding

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ASE Industrial Holding are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, ASE Industrial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Nano Labs and ASE Industrial

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

The idea behind Nano Labs and ASE Industrial Holding 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.