Correlation Between Scottie Resources and Givaudan

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

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

Diversification Opportunities for Scottie Resources and Givaudan

0.61

Correlation Coefficient

Scottie Resources  Givaudan

Poor diversification

The 3 months correlation between Scottie and Givaudan is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Scottie Resources Corp and Givaudan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA ADR and Scottie Resources 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 Scottie Resources Corp 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 ADR has no effect on the direction of Scottie Resources i.e., Scottie Resources and Givaudan go up and down completely randomly.

Pair Corralation between Scottie Resources and Givaudan

Assuming the 90 days horizon Scottie Resources Corp is expected to generate 5.51 times more return on investment than Givaudan. However, Scottie Resources is 5.51 times more volatile than Givaudan SA ADR. It trades about 0.02 of its potential returns per unit of risk. Givaudan SA ADR is currently generating about -0.03 per unit of risk. If you would invest  13.00  in Scottie Resources Corp on September 1, 2024 and sell it today you would lose (1.00) from holding Scottie Resources Corp or give up 7.69% of portfolio value over 90 days.

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

Scottie Resources Corp  vs.  Givaudan SA ADR

Scottie Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scottie Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Scottie Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Givaudan SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Scottie Resources and Givaudan

The main advantage of trading using opposite Scottie Resources and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scottie Resources 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 Scottie Resources Corp and Givaudan SA ADR 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.