Correlation Between 3D Systems and Givaudan

Can any of the company-specific risk be diversified away by investing in both 3D Systems 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 3D Systems and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3D Systems and Givaudan SA ADR, you can compare the effects of market volatilities on 3D Systems 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 3D Systems with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3D Systems and Givaudan.

Diversification Opportunities for 3D Systems and Givaudan

-0.06

Correlation Coefficient

3D Systems  Givaudan

Good diversification

The 3 months correlation between DDD and Givaudan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding 3D Systems and Givaudan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA ADR and 3D Systems 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 3D Systems 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 ADR has no effect on the direction of 3D Systems i.e., 3D Systems and Givaudan go up and down completely randomly.

Pair Corralation between 3D Systems and Givaudan

Considering the 90-day investment horizon 3D Systems is expected to generate 3.99 times more return on investment than Givaudan. However, 3D Systems is 3.99 times more volatile than Givaudan SA ADR. It trades about 0.09 of its potential returns per unit of risk. Givaudan SA ADR is currently generating about 0.03 per unit of risk. If you would invest  279.00  in 3D Systems on December 1, 2024 and sell it today you would earn a total of  70.00  from holding 3D Systems or generate 25.09% return on investment over 90 days.

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

3D Systems  vs.  Givaudan SA ADR

3D Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 3D Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, 3D Systems exhibited solid returns over the last few months and may actually be approaching a breakup point.

Givaudan SA ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Givaudan SA ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Givaudan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 3D Systems and Givaudan

The main advantage of trading using opposite 3D Systems and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3D Systems 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 3D Systems and Givaudan SA ADR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.