Correlation Between Pentagon I and NVIDIA CDR

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

By analyzing existing cross correlation between Pentagon I Capital and NVIDIA CDR, you can compare the effects of market volatilities on Pentagon I and NVIDIA CDR 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 Pentagon I with a short position of NVIDIA CDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentagon I and NVIDIA CDR.

Diversification Opportunities for Pentagon I and NVIDIA CDR

0.0

Correlation Coefficient

Pentagon I  NVIDIA CDR

Pay attention - limited upside

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

Pair Corralation between Pentagon I and NVIDIA CDR

If you would invest  2,695  in NVIDIA CDR on May 7, 2025 and sell it today you would earn a total of  1,297  from holding NVIDIA CDR or generate 48.13% return on investment over 90 days.

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

Pentagon I Capital  vs.  NVIDIA CDR

Pentagon I Capital

Risk-Adjusted Performance

Weakest

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Pentagon I is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

NVIDIA CDR

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NVIDIA CDR are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, NVIDIA CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pentagon I and NVIDIA CDR

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

The idea behind Pentagon I Capital and NVIDIA CDR 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.