Correlation Between NVIDIA and Scorpius Holdings

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

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

Diversification Opportunities for NVIDIA and Scorpius Holdings

0.48

Correlation Coefficient

NVIDIA  Scorpius Holdings

Very weak diversification

The 3 months correlation between NVIDIA and Scorpius is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Scorpius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scorpius Holdings 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 Scorpius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scorpius Holdings has no effect on the direction of NVIDIA i.e., NVIDIA and Scorpius Holdings go up and down completely randomly.

Pair Corralation between NVIDIA and Scorpius Holdings

Given the investment horizon of 90 days NVIDIA is expected to generate 0.23 times more return on investment than Scorpius Holdings. However, NVIDIA is 4.4 times less risky than Scorpius Holdings. It trades about -0.02 of its potential returns per unit of risk. Scorpius Holdings is currently generating about -0.08 per unit of risk. If you would invest  14,370  in NVIDIA on October 21, 2024 and sell it today you would lose (599.00) from holding NVIDIA or give up 4.17% of portfolio value over 90 days.

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

NVIDIA  vs.  Scorpius Holdings

NVIDIA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NVIDIA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, NVIDIA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Scorpius Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scorpius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NVIDIA and Scorpius Holdings

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

The idea behind NVIDIA and Scorpius Holdings 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.