Correlation Between DSV Panalpina and Givaudan

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

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

Diversification Opportunities for DSV Panalpina and Givaudan

0.03

Correlation Coefficient

DSV Panalpina  Givaudan

Significant diversification

The 3 months correlation between DSV and Givaudan is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding DSV Panalpina AS 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 DSV Panalpina 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 DSV Panalpina AS 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 DSV Panalpina i.e., DSV Panalpina and Givaudan go up and down completely randomly.

Pair Corralation between DSV Panalpina and Givaudan

Assuming the 90 days horizon DSV Panalpina AS is expected to generate 1.0 times more return on investment than Givaudan. However, DSV Panalpina is 1.0 times more volatile than Givaudan SA ADR. It trades about -0.03 of its potential returns per unit of risk. Givaudan SA ADR is currently generating about -0.06 per unit of risk. If you would invest  10,680  in DSV Panalpina AS on September 22, 2024 and sell it today you would lose (102.00) from holding DSV Panalpina AS or give up 0.96% of portfolio value over 90 days.

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

DSV Panalpina AS  vs.  Givaudan SA ADR

DSV Panalpina AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DSV Panalpina AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, DSV Panalpina is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Givaudan SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with DSV Panalpina and Givaudan

The main advantage of trading using opposite DSV Panalpina and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DSV Panalpina 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 DSV Panalpina AS 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 Global Correlations module to find global opportunities by holding instruments from different markets.