Correlation Between NVIDIA and Premier Polyfilm

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

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

Diversification Opportunities for NVIDIA and Premier Polyfilm

0.4

Correlation Coefficient

NVIDIA  Premier Polyfilm

Very weak diversification

The 3 months correlation between NVIDIA and Premier is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Premier Polyfilm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Polyfilm 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 Premier Polyfilm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Polyfilm has no effect on the direction of NVIDIA i.e., NVIDIA and Premier Polyfilm go up and down completely randomly.

Pair Corralation between NVIDIA and Premier Polyfilm

Given the investment horizon of 90 days NVIDIA is expected to generate 0.83 times more return on investment than Premier Polyfilm. However, NVIDIA is 1.2 times less risky than Premier Polyfilm. It trades about 0.15 of its potential returns per unit of risk. Premier Polyfilm Limited is currently generating about 0.1 per unit of risk. If you would invest  1,689  in NVIDIA on October 4, 2024 and sell it today you would earn a total of  11,740  from holding NVIDIA or generate 695.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.58%
Values	Daily Returns

NVIDIA  vs.  Premier Polyfilm Limited

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.

Premier Polyfilm

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Premier Polyfilm Limited are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Premier Polyfilm reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NVIDIA and Premier Polyfilm

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

The idea behind NVIDIA and Premier Polyfilm Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.