Correlation Between Orion Engineered and Givaudan

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

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

Diversification Opportunities for Orion Engineered and Givaudan

0.08

Correlation Coefficient

Orion Engineered  Givaudan

Significant diversification

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

Pair Corralation between Orion Engineered and Givaudan

Considering the 90-day investment horizon Orion Engineered Carbons is expected to under-perform the Givaudan. But the stock apears to be less risky and, when comparing its historical volatility, Orion Engineered Carbons is 1.33 times less risky than Givaudan. The stock trades about -0.11 of its potential returns per unit of risk. The Givaudan SA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  411,101  in Givaudan SA on December 28, 2024 and sell it today you would lose (1,857) from holding Givaudan SA or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Orion Engineered Carbons  vs.  Givaudan SA

Orion Engineered Carbons

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orion Engineered Carbons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Givaudan SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Givaudan SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Givaudan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Orion Engineered and Givaudan

The main advantage of trading using opposite Orion Engineered and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered 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 Orion Engineered Carbons 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.