Correlation Between Givaudan and Adriatic Metals
Can any of the company-specific risk be diversified away by investing in both Givaudan and Adriatic Metals 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 Givaudan and Adriatic Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Adriatic Metals, you can compare the effects of market volatilities on Givaudan and Adriatic Metals 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 Givaudan with a short position of Adriatic Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Adriatic Metals.
Diversification Opportunities for Givaudan and Adriatic Metals
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Givaudan and Adriatic is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Adriatic Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adriatic Metals and Givaudan 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 Givaudan SA are associated (or correlated) with Adriatic Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adriatic Metals has no effect on the direction of Givaudan i.e., Givaudan and Adriatic Metals go up and down completely randomly.
Pair Corralation between Givaudan and Adriatic Metals
Assuming the 90 days trading horizon Givaudan SA is expected to generate 0.52 times more return on investment than Adriatic Metals. However, Givaudan SA is 1.91 times less risky than Adriatic Metals. It trades about 0.31 of its potential returns per unit of risk. Adriatic Metals is currently generating about -0.16 per unit of risk. If you would invest 379,681 in Givaudan SA on September 18, 2024 and sell it today you would earn a total of 21,519 from holding Givaudan SA or generate 5.67% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Givaudan SA vs. Adriatic Metals
Performance |
Timeline |
Givaudan SA |
Adriatic Metals |
Givaudan and Adriatic Metals Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Givaudan and Adriatic Metals
The main advantage of trading using opposite Givaudan and Adriatic Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Adriatic Metals 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 Adriatic Metals will offset losses from the drop in Adriatic Metals' long position.Givaudan vs. Virgin Wines UK | Givaudan vs. Everyman Media Group | Givaudan vs. LBG Media PLC | Givaudan vs. Auto Trader Group |
Adriatic Metals vs. Givaudan SA | Adriatic Metals vs. Antofagasta PLC | Adriatic Metals vs. Ferrexpo PLC | Adriatic Metals vs. Atalaya Mining |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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