Correlation Between Metalnrg PLC and Givaudan

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

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

Diversification Opportunities for Metalnrg PLC and Givaudan

-0.08

Correlation Coefficient

Metalnrg PLC  Givaudan

Good diversification

The 3 months correlation between Metalnrg and Givaudan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Metalnrg PLC and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Metalnrg PLC 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 Metalnrg PLC 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 Metalnrg PLC i.e., Metalnrg PLC and Givaudan go up and down completely randomly.

Pair Corralation between Metalnrg PLC and Givaudan

Assuming the 90 days trading horizon Metalnrg PLC is expected to under-perform the Givaudan. In addition to that, Metalnrg PLC is 9.63 times more volatile than Givaudan SA. It trades about -0.19 of its total potential returns per unit of risk. Givaudan SA is currently generating about 0.06 per unit of volatility. If you would invest  389,700  in Givaudan SA on December 5, 2024 and sell it today you would earn a total of  16,950  from holding Givaudan SA or generate 4.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	73.77%
Values	Daily Returns

Metalnrg PLC  vs.  Givaudan SA

Metalnrg PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metalnrg PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Givaudan SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Givaudan SA are ranked lower than 4 (%) 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 Metalnrg PLC and Givaudan

The main advantage of trading using opposite Metalnrg PLC and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metalnrg PLC 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 Metalnrg PLC 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.