Correlation Between Givaudan and Givaudan

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

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

Diversification Opportunities for Givaudan and Givaudan

0.19

Correlation Coefficient

Givaudan  Givaudan

Average diversification

The 3 months correlation between Givaudan and Givaudan is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA 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 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 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 Givaudan i.e., Givaudan and Givaudan go up and down completely randomly.

Pair Corralation between Givaudan and Givaudan

Assuming the 90 days horizon Givaudan SA is expected to generate 1.92 times more return on investment than Givaudan. However, Givaudan is 1.92 times more volatile than Givaudan SA ADR. It trades about 0.05 of its potential returns per unit of risk. Givaudan SA ADR is currently generating about 0.02 per unit of risk. If you would invest  411,101  in Givaudan SA on December 30, 2024 and sell it today you would earn a total of  23,148  from holding Givaudan SA or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Givaudan SA  vs.  Givaudan SA ADR

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. Despite nearly weak fundamental drivers, Givaudan may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 1 (%) 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 Givaudan and Givaudan

The main advantage of trading using opposite Givaudan and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan 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 Givaudan SA 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.