Correlation Between Technology Minerals and Givaudan

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

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

Diversification Opportunities for Technology Minerals and Givaudan

-0.08

Correlation Coefficient

Technology Minerals  Givaudan

Good diversification

The 3 months correlation between Technology and Givaudan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Technology Minerals PLC and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Technology Minerals 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 Technology Minerals PLC 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 Technology Minerals i.e., Technology Minerals and Givaudan go up and down completely randomly.

Pair Corralation between Technology Minerals and Givaudan

Assuming the 90 days trading horizon Technology Minerals PLC is expected to generate 31.86 times more return on investment than Givaudan. However, Technology Minerals is 31.86 times more volatile than Givaudan SA. It trades about 0.17 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.01 per unit of risk. If you would invest  11.00  in Technology Minerals PLC on October 10, 2024 and sell it today you would earn a total of  6.00  from holding Technology Minerals PLC or generate 54.55% return on investment over 90 days.

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

Technology Minerals PLC  vs.  Givaudan SA

Technology Minerals PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Minerals PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Technology Minerals exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Technology Minerals and Givaudan

The main advantage of trading using opposite Technology Minerals and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Technology Minerals 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 Technology Minerals PLC 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.