Correlation Between Sabre Insurance and Givaudan

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

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

Diversification Opportunities for Sabre Insurance and Givaudan

0.8

Correlation Coefficient

Sabre Insurance  Givaudan

Very poor diversification

The 3 months correlation between Sabre and Givaudan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sabre Insurance Group and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Sabre Insurance 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 Sabre Insurance Group 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 Sabre Insurance i.e., Sabre Insurance and Givaudan go up and down completely randomly.

Pair Corralation between Sabre Insurance and Givaudan

Assuming the 90 days trading horizon Sabre Insurance Group is expected to under-perform the Givaudan. In addition to that, Sabre Insurance is 1.5 times more volatile than Givaudan SA. It trades about -0.14 of its total potential returns per unit of risk. Givaudan SA is currently generating about -0.18 per unit of volatility. If you would invest  442,450  in Givaudan SA on September 4, 2024 and sell it today you would lose (56,300) from holding Givaudan SA or give up 12.72% of portfolio value over 90 days.

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

Sabre Insurance Group  vs.  Givaudan SA

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Givaudan SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sabre Insurance and Givaudan

The main advantage of trading using opposite Sabre Insurance and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabre Insurance 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 Sabre Insurance Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.