Correlation Between Givaudan and Caledonia Mining
Can any of the company-specific risk be diversified away by investing in both Givaudan and Caledonia Mining 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 Caledonia Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Caledonia Mining, you can compare the effects of market volatilities on Givaudan and Caledonia Mining 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 Caledonia Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Caledonia Mining.
Diversification Opportunities for Givaudan and Caledonia Mining
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Givaudan and Caledonia is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Caledonia Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caledonia Mining 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 Caledonia Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caledonia Mining has no effect on the direction of Givaudan i.e., Givaudan and Caledonia Mining go up and down completely randomly.
Pair Corralation between Givaudan and Caledonia Mining
Assuming the 90 days trading horizon Givaudan SA is expected to generate 0.41 times more return on investment than Caledonia Mining. However, Givaudan SA is 2.46 times less risky than Caledonia Mining. It trades about -0.26 of its potential returns per unit of risk. Caledonia Mining is currently generating about -0.45 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Givaudan SA vs. Caledonia Mining
Performance |
| Timeline |
| Givaudan SA |
| Caledonia Mining |
Givaudan and Caledonia Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Caledonia Mining
The main advantage of trading using opposite Givaudan and Caledonia Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Caledonia Mining 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 Caledonia Mining will offset losses from the drop in Caledonia Mining's long position.| Givaudan vs. mobilezone holding AG | Givaudan vs. AcadeMedia AB | Givaudan vs. Intermediate Capital Group | Givaudan vs. Hollywood Bowl Group |
| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Amaroq Minerals | Caledonia Mining vs. Central Asia Metals |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |