Correlation Between NVIDIA and Ams AG

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

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

Diversification Opportunities for NVIDIA and Ams AG

-0.21

Correlation Coefficient

NVIDIA  Ams AG

Very good diversification

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

Pair Corralation between NVIDIA and Ams AG

Given the investment horizon of 90 days NVIDIA is expected to under-perform the Ams AG. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 1.61 times less risky than Ams AG. The stock trades about -0.11 of its potential returns per unit of risk. The ams AG is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  639.00  in ams AG on October 5, 2024 and sell it today you would earn a total of  96.00  from holding ams AG or generate 15.02% return on investment over 90 days.

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

NVIDIA  vs.  ams AG

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.

ams AG

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ams AG are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Ams AG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Ams AG

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

The idea behind NVIDIA and ams AG 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.