Correlation Between Givaudan and Endeavour Mining

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

By analyzing existing cross correlation between Givaudan SA and Endeavour Mining Corp, you can compare the effects of market volatilities on Givaudan and Endeavour Mining 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 Givaudan with a short position of Endeavour Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Endeavour Mining.

Diversification Opportunities for Givaudan and Endeavour Mining

-0.25

Correlation Coefficient

Givaudan  Endeavour Mining

Very good diversification

The 3 months correlation between Givaudan and Endeavour is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Endeavour Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavour Mining Corp and Givaudan 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 Givaudan SA are associated (or correlated) with Endeavour Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavour Mining Corp has no effect on the direction of Givaudan i.e., Givaudan and Endeavour Mining go up and down completely randomly.

Pair Corralation between Givaudan and Endeavour Mining

Assuming the 90 days trading horizon Givaudan SA is expected to under-perform the Endeavour Mining. But the stock apears to be less risky and, when comparing its historical volatility, Givaudan SA is 1.66 times less risky than Endeavour Mining. The stock trades about -0.04 of its potential returns per unit of risk. The Endeavour Mining Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  139,200  in Endeavour Mining Corp on December 30, 2024 and sell it today you would earn a total of  43,200  from holding Endeavour Mining Corp or generate 31.03% return on investment over 90 days.

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

Givaudan SA  vs.  Endeavour Mining Corp

Givaudan SA

Risk-Adjusted Performance

Very Weak

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

Endeavour Mining Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavour Mining Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Endeavour Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Givaudan and Endeavour Mining

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

The idea behind Givaudan SA and Endeavour Mining Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.