Correlation Between NVIDIA and PETRONAS Chemicals

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

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

Diversification Opportunities for NVIDIA and PETRONAS Chemicals

0.0

Correlation Coefficient

NVIDIA  PETRONAS Chemicals

Pay attention - limited upside

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

Pair Corralation between NVIDIA and PETRONAS Chemicals

If you would invest  14,506  in NVIDIA on October 6, 2024 and sell it today you would lose (59.00) from holding NVIDIA or give up 0.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

NVIDIA  vs.  PETRONAS Chemicals Group

NVIDIA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

PETRONAS Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PETRONAS Chemicals Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, PETRONAS Chemicals is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NVIDIA and PETRONAS Chemicals

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

The idea behind NVIDIA and PETRONAS Chemicals Group 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.