Correlation Between Nanoform Finland and IRLAB Therapeutics

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

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

Diversification Opportunities for Nanoform Finland and IRLAB Therapeutics

-0.48

Correlation Coefficient

Nanoform Finland  IRLAB Therapeutics

Very good diversification

The 3 months correlation between Nanoform and IRLAB is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Nanoform Finland Plc and IRLAB Therapeutics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRLAB Therapeutics and Nanoform Finland 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 Nanoform Finland Plc are associated (or correlated) with IRLAB Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRLAB Therapeutics has no effect on the direction of Nanoform Finland i.e., Nanoform Finland and IRLAB Therapeutics go up and down completely randomly.

Pair Corralation between Nanoform Finland and IRLAB Therapeutics

Assuming the 90 days trading horizon Nanoform Finland Plc is expected to generate 1.02 times more return on investment than IRLAB Therapeutics. However, Nanoform Finland is 1.02 times more volatile than IRLAB Therapeutics AB. It trades about 0.03 of its potential returns per unit of risk. IRLAB Therapeutics AB is currently generating about -0.16 per unit of risk. If you would invest  1,156  in Nanoform Finland Plc on April 22, 2025 and sell it today you would lose (8.00) from holding Nanoform Finland Plc or give up 0.69% of portfolio value over 90 days.

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

Nanoform Finland Plc  vs.  IRLAB Therapeutics AB

Nanoform Finland Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nanoform Finland Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanoform Finland may actually be approaching a critical reversion point that can send shares even higher in August 2025.

IRLAB Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days IRLAB Therapeutics AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nanoform Finland and IRLAB Therapeutics

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

The idea behind Nanoform Finland Plc and IRLAB Therapeutics AB 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.