Correlation Between NVIDIA and Celltrion Pharm

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

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

Diversification Opportunities for NVIDIA and Celltrion Pharm

-0.57

Correlation Coefficient

NVIDIA  Celltrion Pharm

Excellent diversification

The 3 months correlation between NVIDIA and Celltrion is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Celltrion Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celltrion Pharm 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 Celltrion Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celltrion Pharm has no effect on the direction of NVIDIA i.e., NVIDIA and Celltrion Pharm go up and down completely randomly.

Pair Corralation between NVIDIA and Celltrion Pharm

Given the investment horizon of 90 days NVIDIA is expected to generate 0.74 times more return on investment than Celltrion Pharm. However, NVIDIA is 1.36 times less risky than Celltrion Pharm. It trades about 0.08 of its potential returns per unit of risk. Celltrion Pharm is currently generating about -0.07 per unit of risk. If you would invest  12,491  in NVIDIA on October 4, 2024 and sell it today you would earn a total of  1,340  from holding NVIDIA or generate 10.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

NVIDIA  vs.  Celltrion Pharm

NVIDIA

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 6 (%) 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.

Celltrion Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celltrion Pharm 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 Celltrion Pharm

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

The idea behind NVIDIA and Celltrion Pharm 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.