Correlation Between NVIDIA and Orestone Mining

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

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

Diversification Opportunities for NVIDIA and Orestone Mining

-0.12

Correlation Coefficient

NVIDIA  Orestone Mining

Good diversification

The 3 months correlation between NVIDIA and Orestone is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Orestone Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orestone Mining Corp 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 Orestone Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orestone Mining Corp has no effect on the direction of NVIDIA i.e., NVIDIA and Orestone Mining go up and down completely randomly.

Pair Corralation between NVIDIA and Orestone Mining

Given the investment horizon of 90 days NVIDIA is expected to generate 1.14 times less return on investment than Orestone Mining. But when comparing it to its historical volatility, NVIDIA is 3.15 times less risky than Orestone Mining. It trades about 0.13 of its potential returns per unit of risk. Orestone Mining Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3.00  in Orestone Mining Corp on October 5, 2024 and sell it today you would earn a total of  0.00  from holding Orestone Mining Corp or generate 0.0% return on investment over 90 days.

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

NVIDIA  vs.  Orestone Mining Corp

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.

Orestone Mining Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orestone Mining Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Orestone Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Orestone Mining

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

The idea behind NVIDIA and Orestone Mining Corp 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.