Correlation Between DONGJIANG ENVIRONMENTAL and NVIDIA

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

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

Diversification Opportunities for DONGJIANG ENVIRONMENTAL and NVIDIA

-0.11

Correlation Coefficient

DONGJIANG ENVIRONMENTAL  NVIDIA

Good diversification

The 3 months correlation between DONGJIANG and NVIDIA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding DONGJIANG ENVIRONMENTAL H and NVIDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA and DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL H are associated (or correlated) with NVIDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA has no effect on the direction of DONGJIANG ENVIRONMENTAL i.e., DONGJIANG ENVIRONMENTAL and NVIDIA go up and down completely randomly.

Pair Corralation between DONGJIANG ENVIRONMENTAL and NVIDIA

Assuming the 90 days horizon DONGJIANG ENVIRONMENTAL H is expected to under-perform the NVIDIA. In addition to that, DONGJIANG ENVIRONMENTAL is 1.49 times more volatile than NVIDIA. It trades about 0.0 of its total potential returns per unit of risk. NVIDIA is currently generating about 0.14 per unit of volatility. If you would invest  1,982  in NVIDIA on October 27, 2024 and sell it today you would earn a total of  11,770  from holding NVIDIA or generate 593.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

DONGJIANG ENVIRONMENTAL H  vs.  NVIDIA

DONGJIANG ENVIRONMENTAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DONGJIANG ENVIRONMENTAL H has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NVIDIA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with DONGJIANG ENVIRONMENTAL and NVIDIA

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

The idea behind DONGJIANG ENVIRONMENTAL H and NVIDIA 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.