Correlation Between Givaudan and Greenroc Mining

Can any of the company-specific risk be diversified away by investing in both Givaudan and Greenroc 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 Greenroc 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 Greenroc Mining PLC, you can compare the effects of market volatilities on Givaudan and Greenroc 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 Greenroc Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Greenroc Mining.

Diversification Opportunities for Givaudan and Greenroc Mining

-0.03

Correlation Coefficient

Givaudan  Greenroc Mining

Good diversification

The 3 months correlation between Givaudan and Greenroc is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Greenroc Mining PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenroc Mining PLC 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 Greenroc Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenroc Mining PLC has no effect on the direction of Givaudan i.e., Givaudan and Greenroc Mining go up and down completely randomly.

Pair Corralation between Givaudan and Greenroc Mining

Assuming the 90 days trading horizon Givaudan SA is expected to generate 0.21 times more return on investment than Greenroc Mining. However, Givaudan SA is 4.71 times less risky than Greenroc Mining. It trades about 0.05 of its potential returns per unit of risk. Greenroc Mining PLC is currently generating about -0.02 per unit of risk. If you would invest  388,655  in Givaudan SA on December 1, 2024 and sell it today you would earn a total of  12,045  from holding Givaudan SA or generate 3.1% 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.  Greenroc Mining PLC

Givaudan SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Givaudan SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Givaudan is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Greenroc Mining PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Greenroc Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Givaudan and Greenroc Mining

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

The idea behind Givaudan SA and Greenroc Mining PLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.