Correlation Between NVIDIA and Verkkokauppa Oyj

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

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

Diversification Opportunities for NVIDIA and Verkkokauppa Oyj

0.19

Correlation Coefficient

NVIDIA  Verkkokauppa Oyj

Average diversification

The 3 months correlation between NVIDIA and Verkkokauppa is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Verkkokauppa Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verkkokauppa Oyj 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 Verkkokauppa Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verkkokauppa Oyj has no effect on the direction of NVIDIA i.e., NVIDIA and Verkkokauppa Oyj go up and down completely randomly.

Pair Corralation between NVIDIA and Verkkokauppa Oyj

Given the investment horizon of 90 days NVIDIA is expected to generate 1.19 times less return on investment than Verkkokauppa Oyj. But when comparing it to its historical volatility, NVIDIA is 1.06 times less risky than Verkkokauppa Oyj. It trades about 0.05 of its potential returns per unit of risk. Verkkokauppa Oyj is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  130.00  in Verkkokauppa Oyj on October 21, 2024 and sell it today you would earn a total of  3.00  from holding Verkkokauppa Oyj or generate 2.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.21%
Values	Daily Returns

NVIDIA  vs.  Verkkokauppa Oyj

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.

Verkkokauppa Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verkkokauppa Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Verkkokauppa Oyj

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

The idea behind NVIDIA and Verkkokauppa Oyj 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.