Correlation Between LQwD FinTech and NVIDIA CDR

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

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

Diversification Opportunities for LQwD FinTech and NVIDIA CDR

0.22

Correlation Coefficient

LQwD FinTech  NVIDIA CDR

Modest diversification

The 3 months correlation between LQwD and NVIDIA is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding LQwD FinTech Corp and NVIDIA CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVIDIA CDR and LQwD FinTech 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 LQwD FinTech Corp are associated (or correlated) with NVIDIA CDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVIDIA CDR has no effect on the direction of LQwD FinTech i.e., LQwD FinTech and NVIDIA CDR go up and down completely randomly.

Pair Corralation between LQwD FinTech and NVIDIA CDR

Assuming the 90 days trading horizon LQwD FinTech is expected to generate 1.07 times less return on investment than NVIDIA CDR. In addition to that, LQwD FinTech is 2.48 times more volatile than NVIDIA CDR. It trades about 0.06 of its total potential returns per unit of risk. NVIDIA CDR is currently generating about 0.15 per unit of volatility. If you would invest  403.00  in NVIDIA CDR on October 10, 2024 and sell it today you would earn a total of  2,873  from holding NVIDIA CDR or generate 712.9% return on investment over 90 days.

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

LQwD FinTech Corp  vs.  NVIDIA CDR

LQwD FinTech Corp

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LQwD FinTech Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, LQwD FinTech showed solid returns over the last few months and may actually be approaching a breakup point.

NVIDIA CDR

Risk-Adjusted Performance

2 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, NVIDIA CDR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with LQwD FinTech and NVIDIA CDR

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

The idea behind LQwD FinTech Corp and NVIDIA CDR 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.