Correlation Between Capital Drilling and Givaudan

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

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

Diversification Opportunities for Capital Drilling and Givaudan

-0.39

Correlation Coefficient

Capital Drilling  Givaudan

Very good diversification

The 3 months correlation between Capital and Givaudan is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Capital Drilling and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Capital Drilling 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 Capital Drilling are associated (or correlated) with Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Capital Drilling i.e., Capital Drilling and Givaudan go up and down completely randomly.

Pair Corralation between Capital Drilling and Givaudan

Assuming the 90 days trading horizon Capital Drilling is expected to under-perform the Givaudan. In addition to that, Capital Drilling is 2.7 times more volatile than Givaudan SA. It trades about -0.12 of its total potential returns per unit of risk. Givaudan SA is currently generating about -0.04 per unit of volatility. If you would invest  396,800  in Givaudan SA on December 24, 2024 and sell it today you would lose (16,000) from holding Givaudan SA or give up 4.03% of portfolio value over 90 days.

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

Capital Drilling  vs.  Givaudan SA

Capital Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capital Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Capital Drilling and Givaudan

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

The idea behind Capital Drilling and Givaudan SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.