Correlation Between NVIDIA and Asahi Group

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

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

Diversification Opportunities for NVIDIA and Asahi Group

-0.61

Correlation Coefficient

NVIDIA  Asahi Group

Excellent diversification

The 3 months correlation between NVIDIA and Asahi is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Asahi Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asahi Group 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 Asahi Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asahi Group Holdings has no effect on the direction of NVIDIA i.e., NVIDIA and Asahi Group go up and down completely randomly.

Pair Corralation between NVIDIA and Asahi Group

Given the investment horizon of 90 days NVIDIA is expected to generate 0.58 times more return on investment than Asahi Group. However, NVIDIA is 1.73 times less risky than Asahi Group. It trades about 0.07 of its potential returns per unit of risk. Asahi Group Holdings is currently generating about -0.04 per unit of risk. If you would invest  12,350  in NVIDIA on September 25, 2024 and sell it today you would earn a total of  1,120  from holding NVIDIA or generate 9.07% return on investment over 90 days.

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

NVIDIA  vs.  Asahi Group Holdings

NVIDIA

Risk-Adjusted Performance

5 of 100

OK

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 January 2025.

Asahi Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asahi Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with NVIDIA and Asahi Group

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

The idea behind NVIDIA and Asahi Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.