Correlation Between NVIDIA and Alpha Pro

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

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

Diversification Opportunities for NVIDIA and Alpha Pro

-0.5

Correlation Coefficient

NVIDIA  Alpha Pro

Very good diversification

The 3 months correlation between NVIDIA and Alpha is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and Alpha Pro Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Pro Tech 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 Alpha Pro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Pro Tech has no effect on the direction of NVIDIA i.e., NVIDIA and Alpha Pro go up and down completely randomly.

Pair Corralation between NVIDIA and Alpha Pro

Given the investment horizon of 90 days NVIDIA is expected to generate 1.6 times more return on investment than Alpha Pro. However, NVIDIA is 1.6 times more volatile than Alpha Pro Tech. It trades about 0.1 of its potential returns per unit of risk. Alpha Pro Tech is currently generating about -0.08 per unit of risk. If you would invest  17,999  in NVIDIA on August 4, 2025 and sell it today you would earn a total of  2,250  from holding NVIDIA or generate 12.5% 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.  Alpha Pro Tech

NVIDIA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain fundamental indicators, NVIDIA may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Alpha Pro Tech

Risk-Adjusted Performance

Weakest

Over the last 90 days Alpha Pro Tech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alpha Pro is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NVIDIA and Alpha Pro

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

The idea behind NVIDIA and Alpha Pro Tech 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.