Correlation Between NVIDIA and Elmos Semiconductor

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

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

Diversification Opportunities for NVIDIA and Elmos Semiconductor

-0.55

Correlation Coefficient

NVIDIA  Elmos Semiconductor

Excellent diversification

The 3 months correlation between NVIDIA and Elmos is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor 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 Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of NVIDIA i.e., NVIDIA and Elmos Semiconductor go up and down completely randomly.

Pair Corralation between NVIDIA and Elmos Semiconductor

Assuming the 90 days horizon NVIDIA is expected to generate 0.78 times more return on investment than Elmos Semiconductor. However, NVIDIA is 1.28 times less risky than Elmos Semiconductor. It trades about 0.19 of its potential returns per unit of risk. Elmos Semiconductor SE is currently generating about -0.08 per unit of risk. If you would invest  9,787  in NVIDIA on September 3, 2024 and sell it today you would earn a total of  3,261  from holding NVIDIA or generate 33.32% return on investment over 90 days.

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

NVIDIA  vs.  Elmos Semiconductor SE

NVIDIA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NVIDIA reported solid returns over the last few months and may actually be approaching a breakup point.

Elmos Semiconductor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elmos Semiconductor SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with NVIDIA and Elmos Semiconductor

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

The idea behind NVIDIA and Elmos Semiconductor SE 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.