Correlation Between SC and NANO

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

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

Diversification Opportunities for SC and NANO

0.62

Correlation Coefficient

SC  NANO

Poor diversification

The 3 months correlation between SC and NANO is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SC and NANO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NANO and SC 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 SC are associated (or correlated) with NANO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NANO has no effect on the direction of SC i.e., SC and NANO go up and down completely randomly.

Pair Corralation between SC and NANO

Assuming the 90 days horizon SC is expected to generate 2.8 times less return on investment than NANO. But when comparing it to its historical volatility, SC is 1.02 times less risky than NANO. It trades about 0.01 of its potential returns per unit of risk. NANO is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  101.00  in NANO on April 23, 2025 and sell it today you would earn a total of  4.00  from holding NANO or generate 3.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

SC  vs.  NANO

SC

Risk-Adjusted Performance

Very Weak

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

NANO

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NANO are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, NANO may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with SC and NANO

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

The idea behind SC and NANO 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.