Correlation Between NVIDIA CDR and Calian Technologies

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

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

Diversification Opportunities for NVIDIA CDR and Calian Technologies

0.39

Correlation Coefficient

NVIDIA CDR  Calian Technologies

Weak diversification

The 3 months correlation between NVIDIA and Calian is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA CDR and Calian Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calian Technologies and NVIDIA CDR 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 CDR are associated (or correlated) with Calian Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calian Technologies has no effect on the direction of NVIDIA CDR i.e., NVIDIA CDR and Calian Technologies go up and down completely randomly.

Pair Corralation between NVIDIA CDR and Calian Technologies

Assuming the 90 days trading horizon NVIDIA CDR is expected to under-perform the Calian Technologies. In addition to that, NVIDIA CDR is 1.85 times more volatile than Calian Technologies. It trades about -0.02 of its total potential returns per unit of risk. Calian Technologies is currently generating about 0.2 per unit of volatility. If you would invest  4,688  in Calian Technologies on October 22, 2024 and sell it today you would earn a total of  237.00  from holding Calian Technologies or generate 5.06% return on investment over 90 days.

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

NVIDIA CDR  vs.  Calian Technologies

NVIDIA CDR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Calian Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calian Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Calian Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NVIDIA CDR and Calian Technologies

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

The idea behind NVIDIA CDR and Calian Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.