Correlation Between Givaudan and Nano One

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

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

Diversification Opportunities for Givaudan and Nano One

-0.68

Correlation Coefficient

Givaudan  Nano One

Excellent diversification

The 3 months correlation between Givaudan and Nano is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA ADR and Nano One Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano One Materials 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 ADR are associated (or correlated) with Nano One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano One Materials has no effect on the direction of Givaudan i.e., Givaudan and Nano One go up and down completely randomly.

Pair Corralation between Givaudan and Nano One

Assuming the 90 days horizon Givaudan SA ADR is expected to generate 0.38 times more return on investment than Nano One. However, Givaudan SA ADR is 2.6 times less risky than Nano One. It trades about 0.02 of its potential returns per unit of risk. Nano One Materials is currently generating about -0.08 per unit of risk. If you would invest  8,593  in Givaudan SA ADR on December 29, 2024 and sell it today you would earn a total of  96.00  from holding Givaudan SA ADR or generate 1.12% return on investment over 90 days.

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

Givaudan SA ADR  vs.  Nano One Materials

Givaudan SA ADR

Risk-Adjusted Performance

Very 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.

Nano One Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nano One Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Givaudan and Nano One

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

The idea behind Givaudan SA ADR and Nano One Materials 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.