Correlation Between NVE and AXT
Can any of the company-specific risk be diversified away by investing in both NVE and AXT 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 NVE and AXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NVE Corporation and AXT Inc, you can compare the effects of market volatilities on NVE and AXT 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 NVE with a short position of AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of NVE and AXT.
Diversification Opportunities for NVE and AXT
Very good diversification
The 3 months correlation between NVE and AXT is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NVE Corp. and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc and NVE 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 NVE Corporation are associated (or correlated) with AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of NVE i.e., NVE and AXT go up and down completely randomly.
Pair Corralation between NVE and AXT
Given the investment horizon of 90 days NVE Corporation is expected to under-perform the AXT. But the stock apears to be less risky and, when comparing its historical volatility, NVE Corporation is 2.98 times less risky than AXT. The stock trades about -0.04 of its potential returns per unit of risk. The AXT Inc is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 523.00 in AXT Inc on October 9, 2025 and sell it today you would earn a total of 1,494 from holding AXT Inc or generate 285.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NVE Corp. vs. AXT Inc
Performance |
| Timeline |
| NVE Corporation |
| AXT Inc |
NVE and AXT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NVE and AXT
The main advantage of trading using opposite NVE and AXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NVE position performs unexpectedly, AXT 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 AXT will offset losses from the drop in AXT's long position.The idea behind NVE Corporation and AXT Inc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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