Correlation Between Straumann Holding and Givaudan

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

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

Diversification Opportunities for Straumann Holding and Givaudan

0.9

Correlation Coefficient

Straumann Holding  Givaudan

Almost no diversification

The 3 months correlation between Straumann and Givaudan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Straumann Holding AG and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Straumann Holding 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 Straumann Holding AG 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 Straumann Holding i.e., Straumann Holding and Givaudan go up and down completely randomly.

Pair Corralation between Straumann Holding and Givaudan

Assuming the 90 days trading horizon Straumann Holding AG is expected to generate 1.75 times more return on investment than Givaudan. However, Straumann Holding is 1.75 times more volatile than Givaudan SA. It trades about -0.02 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.17 per unit of risk. If you would invest  12,305  in Straumann Holding AG on September 16, 2024 and sell it today you would lose (440.00) from holding Straumann Holding AG or give up 3.58% of portfolio value over 90 days.

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

Straumann Holding AG  vs.  Givaudan SA

Straumann Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Straumann Holding AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Straumann Holding is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated 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 latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Straumann Holding and Givaudan

The main advantage of trading using opposite Straumann Holding and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Straumann Holding 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 Straumann Holding AG 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.