Correlation Between Alien Metals and Givaudan

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

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

Diversification Opportunities for Alien Metals and Givaudan

0.26

Correlation Coefficient

Alien Metals  Givaudan

Modest diversification

The 3 months correlation between Alien and Givaudan is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Alien Metals and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Alien Metals 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 Alien Metals 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 Alien Metals i.e., Alien Metals and Givaudan go up and down completely randomly.

Pair Corralation between Alien Metals and Givaudan

Assuming the 90 days trading horizon Alien Metals is expected to under-perform the Givaudan. In addition to that, Alien Metals is 1.84 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 -0.01 per unit of volatility. If you would invest  390,080  in Givaudan SA on October 10, 2024 and sell it today you would lose (1,680) from holding Givaudan SA or give up 0.43% of portfolio value over 90 days.

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

Alien Metals  vs.  Givaudan SA

Alien Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alien Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 unsteady 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 Alien Metals and Givaudan

The main advantage of trading using opposite Alien Metals and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alien Metals 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 Alien Metals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.