Correlation Between NVIDIA and ATMA Participaes

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

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

Diversification Opportunities for NVIDIA and ATMA Participaes

-0.33

Correlation Coefficient

NVIDIA  ATMA Participaes

Very good diversification

The 3 months correlation between NVIDIA and ATMA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NVIDIA and ATMA Participaes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATMA Participaes 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 ATMA Participaes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATMA Participaes has no effect on the direction of NVIDIA i.e., NVIDIA and ATMA Participaes go up and down completely randomly.

Pair Corralation between NVIDIA and ATMA Participaes

Assuming the 90 days trading horizon NVIDIA is expected to generate 0.44 times more return on investment than ATMA Participaes. However, NVIDIA is 2.28 times less risky than ATMA Participaes. It trades about 0.47 of its potential returns per unit of risk. ATMA Participaes SA is currently generating about -0.01 per unit of risk. If you would invest  1,174  in NVIDIA on April 22, 2025 and sell it today you would earn a total of  837.00  from holding NVIDIA or generate 71.29% return on investment over 90 days.

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

NVIDIA  vs.  ATMA Participaes SA

NVIDIA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, NVIDIA sustained solid returns over the last few months and may actually be approaching a breakup point.

ATMA Participaes

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NVIDIA and ATMA Participaes

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

The idea behind NVIDIA and ATMA Participaes SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.