Correlation Between NVIDIA and CELLULAR GOODS

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

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

Diversification Opportunities for NVIDIA and CELLULAR GOODS

-0.06

Correlation Coefficient

NVIDIA  CELLULAR GOODS

Good diversification

The 3 months correlation between NVIDIA and CELLULAR is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and CELLULAR GOODS LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CELLULAR GOODS LS and NVIDIA 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 NVIDIA are associated (or correlated) with CELLULAR GOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CELLULAR GOODS LS has no effect on the direction of NVIDIA i.e., NVIDIA and CELLULAR GOODS go up and down completely randomly.

Pair Corralation between NVIDIA and CELLULAR GOODS

Assuming the 90 days trading horizon NVIDIA is expected to under-perform the CELLULAR GOODS. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 11.34 times less risky than CELLULAR GOODS. The stock trades about -0.06 of its potential returns per unit of risk. The CELLULAR GOODS LS is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  0.05  in CELLULAR GOODS LS on December 23, 2024 and sell it today you would earn a total of  0.15  from holding CELLULAR GOODS LS or generate 300.0% return on investment over 90 days.

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

NVIDIA  vs.  CELLULAR GOODS LS

NVIDIA

Risk-Adjusted Performance

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CELLULAR GOODS LS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CELLULAR GOODS LS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CELLULAR GOODS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and CELLULAR GOODS

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

The idea behind NVIDIA and CELLULAR GOODS LS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.