Correlation Between NVIDIA and Highland Surprise

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

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

Diversification Opportunities for NVIDIA and Highland Surprise

0.0

Correlation Coefficient

NVIDIA  Highland Surprise

Pay attention - limited upside

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

Pair Corralation between NVIDIA and Highland Surprise

Given the investment horizon of 90 days NVIDIA is expected to generate 1.33 times more return on investment than Highland Surprise. However, NVIDIA is 1.33 times more volatile than Highland Surprise Consolidated. It trades about 0.14 of its potential returns per unit of risk. Highland Surprise Consolidated is currently generating about 0.05 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	Flat
Strength	Insignificant
Accuracy	99.78%
Values	Daily Returns

NVIDIA  vs.  Highland Surprise Consolidated

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.

Highland Surprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highland Surprise Consolidated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Highland Surprise is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NVIDIA and Highland Surprise

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

The idea behind NVIDIA and Highland Surprise Consolidated 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.

Check out your portfolio center.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.