Correlation Between Power Metal and Givaudan

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

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

Diversification Opportunities for Power Metal and Givaudan

-0.04

Correlation Coefficient

Power Metal  Givaudan

Good diversification

The 3 months correlation between Power and Givaudan is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Power Metal Resources and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Power Metal 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 Power Metal Resources 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 Power Metal i.e., Power Metal and Givaudan go up and down completely randomly.

Pair Corralation between Power Metal and Givaudan

Assuming the 90 days trading horizon Power Metal Resources is expected to under-perform the Givaudan. In addition to that, Power Metal is 2.14 times more volatile than Givaudan SA. It trades about -0.07 of its total potential returns per unit of risk. Givaudan SA is currently generating about 0.05 per unit of volatility. If you would invest  388,655  in Givaudan SA on December 1, 2024 and sell it today you would earn a total of  12,045  from holding Givaudan SA or generate 3.1% return on investment over 90 days.

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

Power Metal Resources  vs.  Givaudan SA

Power Metal Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Metal Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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. In spite of comparatively stable basic indicators, Givaudan is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Power Metal and Givaudan

The main advantage of trading using opposite Power Metal and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Metal 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 Power Metal Resources 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.