Correlation Between NVIDIA and Data Knights

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

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

Diversification Opportunities for NVIDIA and Data Knights

0.0

Correlation Coefficient

NVIDIA  Data Knights

Pay attention - limited upside

The 3 months correlation between NVIDIA and Data is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Data Knights Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Knights Acquisition 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 Data Knights. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Knights Acquisition has no effect on the direction of NVIDIA i.e., NVIDIA and Data Knights go up and down completely randomly.

Pair Corralation between NVIDIA and Data Knights

If you would invest  2,422  in NVIDIA on December 4, 2024 and sell it today you would earn a total of  8,984  from holding NVIDIA or generate 370.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NVIDIA  vs.  Data Knights Acquisition

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.

Data Knights Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data Knights Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Data Knights is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NVIDIA and Data Knights

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

The idea behind NVIDIA and Data Knights Acquisition 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.