Correlation Between NVIDIA and 37 Interactive

Can any of the company-specific risk be diversified away by investing in both NVIDIA and 37 Interactive 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 37 Interactive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NVIDIA and 37 Interactive Entertainment, you can compare the effects of market volatilities on NVIDIA and 37 Interactive 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 37 Interactive. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVIDIA and 37 Interactive.

Diversification Opportunities for NVIDIA and 37 Interactive

0.21

Correlation Coefficient

NVIDIA  37 Interactive

Modest diversification

The 3 months correlation between NVIDIA and 002555 is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and 37 Interactive Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 37 Interactive Enter 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 37 Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 37 Interactive Enter has no effect on the direction of NVIDIA i.e., NVIDIA and 37 Interactive go up and down completely randomly.

Pair Corralation between NVIDIA and 37 Interactive

Given the investment horizon of 90 days NVIDIA is expected to generate 1.05 times more return on investment than 37 Interactive. However, NVIDIA is 1.05 times more volatile than 37 Interactive Entertainment. It trades about -0.11 of its potential returns per unit of risk. 37 Interactive Entertainment is currently generating about -0.18 per unit of risk. If you would invest  14,513  in NVIDIA on October 5, 2024 and sell it today you would lose (682.00) from holding NVIDIA or give up 4.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

NVIDIA  vs.  37 Interactive Entertainment

NVIDIA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

37 Interactive Enter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days 37 Interactive Entertainment 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NVIDIA and 37 Interactive

The main advantage of trading using opposite NVIDIA and 37 Interactive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVIDIA position performs unexpectedly, 37 Interactive 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 37 Interactive will offset losses from the drop in 37 Interactive's long position.

The idea behind NVIDIA and 37 Interactive Entertainment 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.