Correlation Between Givaudan and First Tin
Can any of the company-specific risk be diversified away by investing in both Givaudan and First Tin 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 First Tin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and First Tin PLC, you can compare the effects of market volatilities on Givaudan and First Tin 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 First Tin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and First Tin.
Diversification Opportunities for Givaudan and First Tin
Very poor diversification
The 3 months correlation between Givaudan and First is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and First Tin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tin PLC 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 First Tin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tin PLC has no effect on the direction of Givaudan i.e., Givaudan and First Tin go up and down completely randomly.
Pair Corralation between Givaudan and First Tin
Assuming the 90 days trading horizon Givaudan SA is expected to generate 0.46 times more return on investment than First Tin. However, Givaudan SA is 2.19 times less risky than First Tin. It trades about -0.3 of its potential returns per unit of risk. First Tin PLC is currently generating about -0.23 per unit of risk. If you would invest 417,553 in Givaudan SA on August 30, 2024 and sell it today you would lose (34,403) from holding Givaudan SA or give up 8.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Givaudan SA vs. First Tin PLC
Performance |
| Timeline |
| Givaudan SA |
| First Tin PLC |
Givaudan and First Tin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and First Tin
The main advantage of trading using opposite Givaudan and First Tin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, First Tin 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 First Tin will offset losses from the drop in First Tin's long position.| Givaudan vs. Antofagasta PLC | Givaudan vs. Centamin PLC | Givaudan vs. Atalaya Mining | Givaudan vs. Ferrexpo PLC |
| First Tin vs. Catalyst Media Group | First Tin vs. United Utilities Group | First Tin vs. AcadeMedia AB | First Tin vs. Zinc Media Group |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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