Analyzing the Changes in Sharpe Ratio of NVIDIA Concept Stocks Using TEJ API from Jensen Huang's Speech at National Taiwan University

nvidia Jensen Huang's speech
Photo by Lea Øchel on Unsplash

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  • Analyze whether NVIDIA’s partners in Taiwan have become more suitable investment targets following Jensen Huang’s speech at National Taiwan University, using the Sharpe ratio as the standard.

Preface

On June 2, 2024, NVIDIA’s CEO Jensen Huang delivered a speech in Taiwan. At the end of his presentation, he displayed several slides listing Taiwan’s business partners. This moment sparked widespread attention in society and led to innovative terms such as “the world’s strongest AI ETF” and “ETF with Huang content.”
Moreover, Jensen Huang’s influence extended into everyday life. The “Apo Fruit Stall” at Tonghua Street Night Market (aka Linjiang Street Night Market) and the “Fu Bawang Pork Rice” in the Siping Sun Square became news hotspots following his visit, showcasing the admiration and enthusiasm Taiwanese people have for him.
This article uses the Sharpe ratio to assess the changes in NVIDIA’s Taiwanese business partners before and after the speech, analyzing Jensen Huang’s speech’s impact on their related supply chain.

Editing Environment and Module Requirements of Analysis

This article uses the Windows 11 OS and VS code as the editor.

Database Usage

What is the Sharpe ratio?

In the financial field, the Sharpe Ratio is an important indicator for measuring the performance of an investment portfolio. It measures the excess return per unit of risk taken. Naturally, the higher the return for each unit of risk, the better! Therefore, we often use the Sharpe Ratio to evaluate the long-term performance of investment portfolios, set investment goals, and assess the skills of fund managers.

The Sharpe Ratio calculation formula is:
Sharpe Ratio = (Average Daily Return – Risk-Free Rate) / Standard Deviation

Jensen Huang’s Speech Background Panel List

LITEON、UMC、DELTA、Foxconn、Compal、TSMC、Acer、Inventec、ASUS、SOLOMON、GIGABYTE、MSI、Quanta、ADVANTECH、AverMedia、KYEC、MediaTek、LeadTek、TRI、Unimicron、EDOM、Axiomtek、Wistron、G.M.I、ASRock、Thermaltake、MiTAC、ASE、PEGATRON、Coretronic、YUAN、EverFocus、InWin、KENMECS、ADLINK、Lanner、Onyx Healthcare、AAEON、Wiwynn、Neousys、Chenbro Micom、NEXCOM、GIANT.

Data Import

import tejapi
import pandas as pd

tejapi.ApiConfig.api_key  = "Your Key"
tejapi.ApiConfig.api_base = "https://api.tej.com.tw"
tejapi.ApiConfig.ignoretz = True

Establish the stock codes of NVIDIA’s business partners in Taiwan and retrieve their daily return rates (divided into before and after Jensen Huang’s speech)

coid_list = ['6579', '2353', '6166', '2395', '3711', '3515', '2357', '2417', '3088', '8210', '2324', '5371', '2308', '3048', '5484', '2317', '9921', '2376', '3312', '2356', '6117', '6125', '2449', '6245', '2465', '2301', '2454', '3706', '2377', '6922', '8234', '6569', '4938', '2382', '2359', '3030', '3540', '2330', '2303', '3037', '3231', '6669', '5474'] 

tablebefore = tejapi.get (
    'TWN/APRCD2',
    coid = coid_list ,
    mdate = {'gte':'2024-05-02','lte':'2024-06-02'}, 
    paginate = True, 
    opts={'columns':['coid','mdate','roia']},
    )
tableafter = tejapi.get (
    'TWN/APRCD2',
    coid = coid_list ,
    mdate = {'gte':'2024-06-02','lte':'2024-07-02'}, 
    chinese_column_name = True,
    paginate = True, 
    opts={'columns':['coid','mdate','roia']},
    )

dfbefore = pd.DataFrame(tablebefore)
dfafter = pd.DataFrame(tableafter)
Jensen Huang's speech
Jensen Huang’s speech Background list return of day

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Use groupbymean、and std in Pandas to calculate the average daily return and standard deviation to determine the Sharpe ratio and assess whether there is a difference.

nvidia stock price

Use Matplotlib to count the number of stocks that have gone up and down and compare them using a bar chart.

ai 
Jensen Huang net worth

The following chart shows that the number of companies with a decrease in their Sharpe ratio is actually higher, nearly double the number of companies with an increase.

Next, we will use a bar chart for visualization to closely observe the changes in Sharpe ratios of each company before and after the speech.

ai supply chain sharpe ratio

Based on the chart above, it can be observed that many companies’ Sharpe ratios decreased after the speech, with most even turning from positive to negative. However, the standout is EverFocus (5484), whose Sharpe ratio increased from 0.14 to 1.27. A possible reason circulating online is that before Jensen Huang’s Speech announced the partners, EverFocus’s stock price was the lowest, attracting investors’ attention and causing the price to rise steadily, making it a stock to watch.

Conclusion

How do we view the phenomenon of declining Sharpe ratios? We believe that the market has overreacted to Jensen Huang’s speech regarding the list of business partners, reflecting investors’ decisions based on emotions and short-term trends rather than rational long-term investment strategies. This overreaction to Jensen Huang’s speech leads to a short-term surge in prices. Still, the market eventually returns to rationality, causing prices to potentially decline and increasing the standard deviation of returns, which results in a lower Sharpe ratio.

The decline in the Sharpe ratio means that these stocks, while providing returns, are accompanied by greater volatility and risk. This reminds investors to focus more on risk management and long-term returns while pursuing short-term gains. However, we shouldn’t dismiss the entire NVIDIA AI supply chain; it’s important to monitor the performance of these business partners over the long term, especially regarding their ability to achieve substantial business growth and improved profitability after collaborating with Jensen Huang, as this is fundamental to ensuring investment returns.

This implementation analyzes insider transfers using the TEJ API. Using the data provided by TEJ API, we can implement various types of analysis as far as we can imagine. This approach saves time and effort and furnishes investors with a more diversified evaluation method. Explore more related solutions in TEJ Databank. Construct your trading strategy with a high-quality database.

Reminder: The strategy is only for reference and does not represent recommendations or advice on any financial products and investments.

GitHub  Source Code

Changes in Sharpe Ratio of NVIDIA Concept Stocks from Jensen Huang’s Speech

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