Correlation Between Applied Materials, and Nano One

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

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

Diversification Opportunities for Applied Materials, and Nano One

0.28

Correlation Coefficient

Applied Materials,  Nano One

Modest diversification

The 3 months correlation between Applied and Nano is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials, 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 Applied Materials, 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 Applied Materials, 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 Applied Materials, i.e., Applied Materials, and Nano One go up and down completely randomly.

Pair Corralation between Applied Materials, and Nano One

Assuming the 90 days trading horizon Applied Materials, is expected to generate 2.11 times less return on investment than Nano One. But when comparing it to its historical volatility, Applied Materials, is 2.28 times less risky than Nano One. It trades about 0.28 of its potential returns per unit of risk. Nano One Materials is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  62.00  in Nano One Materials on April 16, 2025 and sell it today you would earn a total of  15.00  from holding Nano One Materials or generate 24.19% return on investment over 90 days.

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

Applied Materials,  vs.  Nano One Materials

Applied Materials,

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials, are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Applied Materials, exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nano One Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nano One Materials are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Nano One displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Materials, and Nano One

The main advantage of trading using opposite Applied Materials, and Nano One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Materials, 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 Applied Materials, 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.