Correlation Between NVIDIA and Atomic Minerals

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

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

Diversification Opportunities for NVIDIA and Atomic Minerals

0.4

Correlation Coefficient

NVIDIA  Atomic Minerals

Very weak diversification

The 3 months correlation between NVIDIA and Atomic is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Atomic Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atomic Minerals 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 Atomic Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atomic Minerals has no effect on the direction of NVIDIA i.e., NVIDIA and Atomic Minerals go up and down completely randomly.

Pair Corralation between NVIDIA and Atomic Minerals

Given the investment horizon of 90 days NVIDIA is expected to under-perform the Atomic Minerals. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 16.06 times less risky than Atomic Minerals. The stock trades about -0.08 of its potential returns per unit of risk. The Atomic Minerals is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2.34  in Atomic Minerals on December 4, 2024 and sell it today you would lose (0.14) from holding Atomic Minerals or give up 5.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

NVIDIA  vs.  Atomic Minerals

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 unsteady performance in the last few months, the Stock's fundamental 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.

Atomic Minerals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atomic Minerals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady primary indicators, Atomic Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Atomic Minerals

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

The idea behind NVIDIA and Atomic Minerals 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 Global Correlations module to find global opportunities by holding instruments from different markets.