Correlation Between Givaudan and Central Asia
Can any of the company-specific risk be diversified away by investing in both Givaudan and Central Asia 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 Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Central Asia Metals, you can compare the effects of market volatilities on Givaudan and Central Asia 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 Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Central Asia.
Diversification Opportunities for Givaudan and Central Asia
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Givaudan and Central is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia 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 Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of Givaudan i.e., Givaudan and Central Asia go up and down completely randomly.
Pair Corralation between Givaudan and Central Asia
Assuming the 90 days trading horizon Givaudan SA is expected to generate 1.01 times more return on investment than Central Asia. However, Givaudan is 1.01 times more volatile than Central Asia Metals. It trades about -0.26 of its potential returns per unit of risk. Central Asia Metals is currently generating about -0.37 per unit of risk. If you would invest 422,250 in Givaudan SA on August 25, 2024 and sell it today you would lose (29,250) from holding Givaudan SA or give up 6.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Givaudan SA vs. Central Asia Metals
Performance |
| Timeline |
| Givaudan SA |
| Central Asia Metals |
Givaudan and Central Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Central Asia
The main advantage of trading using opposite Givaudan and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.| Givaudan vs. mobilezone holding AG | Givaudan vs. AcadeMedia AB | Givaudan vs. Intermediate Capital Group | Givaudan vs. Hollywood Bowl Group |
| Central Asia vs. Givaudan SA | Central Asia vs. Antofagasta PLC | Central Asia vs. Amaroq Minerals | Central Asia vs. Metals Exploration Plc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |