Correlation Between NVIDIA and ACG Metals

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

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

Diversification Opportunities for NVIDIA and ACG Metals

0.0

Correlation Coefficient

NVIDIA  ACG Metals

Pay attention - limited upside

The 3 months correlation between NVIDIA and ACG is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and ACG Metals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACG Metals Limited 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 ACG Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACG Metals Limited has no effect on the direction of NVIDIA i.e., NVIDIA and ACG Metals go up and down completely randomly.

Pair Corralation between NVIDIA and ACG Metals

If you would invest  10,799  in NVIDIA on September 3, 2024 and sell it today you would earn a total of  3,026  from holding NVIDIA or generate 28.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NVIDIA  vs.  ACG Metals Limited

NVIDIA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

ACG Metals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACG Metals Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ACG Metals is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NVIDIA and ACG Metals

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

The idea behind NVIDIA and ACG Metals 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.