Correlation Between NVIDIA and Sapporo Holdings

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

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

Diversification Opportunities for NVIDIA and Sapporo Holdings

0.62

Correlation Coefficient

NVIDIA  Sapporo Holdings

Poor diversification

The 3 months correlation between NVIDIA and Sapporo is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Sapporo Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sapporo 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 Sapporo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sapporo Holdings has no effect on the direction of NVIDIA i.e., NVIDIA and Sapporo Holdings go up and down completely randomly.

Pair Corralation between NVIDIA and Sapporo Holdings

If you would invest  1,430  in NVIDIA on September 21, 2024 and sell it today you would earn a total of  11,638  from holding NVIDIA or generate 813.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	11.72%
Values	Daily Returns

NVIDIA  vs.  Sapporo Holdings Limited

NVIDIA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 7 (%) 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.

Sapporo Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapporo Holdings Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Sapporo Holdings 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 Sapporo Holdings

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

The idea behind NVIDIA and Sapporo Holdings 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .