Correlation Between NVIDIA and STRAITS TRADG

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

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

Diversification Opportunities for NVIDIA and STRAITS TRADG

-0.29

Correlation Coefficient

NVIDIA  STRAITS TRADG

Very good diversification

The 3 months correlation between NVIDIA and STRAITS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and STRAITS TRADG SD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAITS TRADG SD 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 STRAITS TRADG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAITS TRADG SD has no effect on the direction of NVIDIA i.e., NVIDIA and STRAITS TRADG go up and down completely randomly.

Pair Corralation between NVIDIA and STRAITS TRADG

Given the investment horizon of 90 days NVIDIA is expected to under-perform the STRAITS TRADG. But the stock apears to be less risky and, when comparing its historical volatility, NVIDIA is 1.02 times less risky than STRAITS TRADG. The stock trades about -0.11 of its potential returns per unit of risk. The STRAITS TRADG SD is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  101.00  in STRAITS TRADG SD on October 5, 2024 and sell it today you would lose (1.00) from holding STRAITS TRADG SD or give up 0.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.0%
Values	Daily Returns

NVIDIA  vs.  STRAITS TRADG SD

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.

STRAITS TRADG SD

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days STRAITS TRADG SD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, STRAITS TRADG 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 STRAITS TRADG

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

The idea behind NVIDIA and STRAITS TRADG SD 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.