Correlation Between International Flavors and Haydale Graphene

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

By analyzing existing cross correlation between International Flavors Fragrances and Haydale Graphene Industries, you can compare the effects of market volatilities on International Flavors and Haydale Graphene 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 International Flavors with a short position of Haydale Graphene. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Flavors and Haydale Graphene.

Diversification Opportunities for International Flavors and Haydale Graphene

0.45

Correlation Coefficient

International Flavors  Haydale Graphene

Very weak diversification

The 3 months correlation between International and Haydale is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding International Flavors Fragranc and Haydale Graphene Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haydale Graphene Ind and International Flavors 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 International Flavors Fragrances are associated (or correlated) with Haydale Graphene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haydale Graphene Ind has no effect on the direction of International Flavors i.e., International Flavors and Haydale Graphene go up and down completely randomly.

Pair Corralation between International Flavors and Haydale Graphene

Considering the 90-day investment horizon International Flavors Fragrances is expected to generate 0.1 times more return on investment than Haydale Graphene. However, International Flavors Fragrances is 10.08 times less risky than Haydale Graphene. It trades about -0.02 of its potential returns per unit of risk. Haydale Graphene Industries is currently generating about 0.0 per unit of risk. If you would invest  8,309  in International Flavors Fragrances on December 2, 2024 and sell it today you would lose (128.00) from holding International Flavors Fragrances or give up 1.54% of portfolio value over 90 days.

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

International Flavors Fragranc  vs.  Haydale Graphene Industries

International Flavors

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Flavors Fragrances has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Haydale Graphene Ind

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haydale Graphene Industries are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Haydale Graphene reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Flavors and Haydale Graphene

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

The idea behind International Flavors Fragrances and Haydale Graphene Industries 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.