Correlation Between NVIDIA and INDOSAT -B-

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

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

Diversification Opportunities for NVIDIA and INDOSAT -B-

-0.81

Correlation Coefficient

NVIDIA  INDOSAT -B-

Pay attention - limited upside

The 3 months correlation between NVIDIA and INDOSAT is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and INDOSAT B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOSAT -B- 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 INDOSAT -B-. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOSAT -B- has no effect on the direction of NVIDIA i.e., NVIDIA and INDOSAT -B- go up and down completely randomly.

Pair Corralation between NVIDIA and INDOSAT -B-

Given the investment horizon of 90 days NVIDIA is expected to generate 0.83 times more return on investment than INDOSAT -B-. However, NVIDIA is 1.2 times less risky than INDOSAT -B-. It trades about 0.13 of its potential returns per unit of risk. INDOSAT B is currently generating about 0.0 per unit of risk. If you would invest  4,516  in NVIDIA on October 4, 2024 and sell it today you would earn a total of  9,315  from holding NVIDIA or generate 206.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.4%
Values	Daily Returns

NVIDIA  vs.  INDOSAT B

NVIDIA

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 6 (%) 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.

INDOSAT -B-

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INDOSAT B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NVIDIA and INDOSAT -B-

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

The idea behind NVIDIA and INDOSAT B 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 Stocks Directory module to find actively traded stocks across global markets.