Correlation Between NVIDIA and Fiplasto

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

By analyzing existing cross correlation between NVIDIA and Fiplasto SA, you can compare the effects of market volatilities on NVIDIA and Fiplasto 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 Fiplasto. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and Fiplasto.

Diversification Opportunities for NVIDIA and Fiplasto

0.58

Correlation Coefficient

NVIDIA  Fiplasto

Very weak diversification

The 3 months correlation between NVIDIA and Fiplasto is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Fiplasto SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiplasto SA 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 Fiplasto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiplasto SA has no effect on the direction of NVIDIA i.e., NVIDIA and Fiplasto go up and down completely randomly.

Pair Corralation between NVIDIA and Fiplasto

Assuming the 90 days trading horizon NVIDIA is expected to generate 1.34 times more return on investment than Fiplasto. However, NVIDIA is 1.34 times more volatile than Fiplasto SA. It trades about -0.02 of its potential returns per unit of risk. Fiplasto SA is currently generating about -0.11 per unit of risk. If you would invest  683,946  in NVIDIA on December 24, 2024 and sell it today you would lose (54,946) from holding NVIDIA or give up 8.03% of portfolio value over 90 days.

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

NVIDIA  vs.  Fiplasto SA

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. Despite somewhat strong basic indicators, NVIDIA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fiplasto SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fiplasto SA 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NVIDIA and Fiplasto

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

The idea behind NVIDIA and Fiplasto SA 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.