Correlation Between Griffin Mining and Givaudan

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

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

Diversification Opportunities for Griffin Mining and Givaudan

0.07

Correlation Coefficient

Griffin Mining  Givaudan

Significant diversification

The 3 months correlation between Griffin and Givaudan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Griffin Mining and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Griffin Mining 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 Griffin Mining 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 Griffin Mining i.e., Griffin Mining and Givaudan go up and down completely randomly.

Pair Corralation between Griffin Mining and Givaudan

Assuming the 90 days trading horizon Griffin Mining is expected to generate 2.2 times more return on investment than Givaudan. However, Griffin Mining is 2.2 times more volatile than Givaudan SA. It trades about 0.17 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.05 per unit of risk. If you would invest  14,500  in Griffin Mining on December 2, 2024 and sell it today you would earn a total of  4,200  from holding Griffin Mining or generate 28.97% return on investment over 90 days.

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

Griffin Mining  vs.  Givaudan SA

Griffin Mining

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Griffin Mining are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Griffin Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

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

Pair Trading with Griffin Mining and Givaudan

The main advantage of trading using opposite Griffin Mining and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Griffin Mining 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 Griffin Mining 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.