Correlation Between Symrise Ag and Givaudan

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

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

Diversification Opportunities for Symrise Ag and Givaudan

0.75

Correlation Coefficient

Symrise Ag  Givaudan

Poor diversification

The 3 months correlation between Symrise and Givaudan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Symrise Ag PK and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Symrise Ag 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 Symrise Ag PK 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 Symrise Ag i.e., Symrise Ag and Givaudan go up and down completely randomly.

Pair Corralation between Symrise Ag and Givaudan

Assuming the 90 days horizon Symrise Ag PK is expected to under-perform the Givaudan. But the pink sheet apears to be less risky and, when comparing its historical volatility, Symrise Ag PK is 1.91 times less risky than Givaudan. The pink sheet trades about -0.28 of its potential returns per unit of risk. The Givaudan SA is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  511,203  in Givaudan SA on September 5, 2024 and sell it today you would lose (78,535) from holding Givaudan SA or give up 15.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Symrise Ag PK  vs.  Givaudan SA

Symrise Ag PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Symrise Ag PK 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 technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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. Despite abnormal performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Symrise Ag and Givaudan

The main advantage of trading using opposite Symrise Ag and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Symrise Ag 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 Symrise Ag PK 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.

Check out your portfolio center.

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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.