Correlation Between NVIDIA and CCL Products

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

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

Diversification Opportunities for NVIDIA and CCL Products

0.03

Correlation Coefficient

NVIDIA  CCL Products

Significant diversification

The 3 months correlation between NVIDIA and CCL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and CCL Products Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Products Limited 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 CCL Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Products Limited has no effect on the direction of NVIDIA i.e., NVIDIA and CCL Products go up and down completely randomly.

Pair Corralation between NVIDIA and CCL Products

Given the investment horizon of 90 days NVIDIA is expected to generate 1.61 times more return on investment than CCL Products. However, NVIDIA is 1.61 times more volatile than CCL Products Limited. It trades about 0.14 of its potential returns per unit of risk. CCL Products Limited is currently generating about 0.04 per unit of risk. If you would invest  2,421  in NVIDIA on October 5, 2024 and sell it today you would earn a total of  11,410  from holding NVIDIA or generate 471.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.8%
Values	Daily Returns

NVIDIA  vs.  CCL Products Limited

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.

CCL Products Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CCL Products Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, CCL Products may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NVIDIA and CCL Products

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

The idea behind NVIDIA and CCL Products Limited 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.