Correlation Between Givaudan and Light Science
Can any of the company-specific risk be diversified away by investing in both Givaudan and Light Science 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 Light Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Light Science Technologies, you can compare the effects of market volatilities on Givaudan and Light Science 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 Light Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Light Science.
Diversification Opportunities for Givaudan and Light Science
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Givaudan and Light is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Light Science Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Science Techno 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 Light Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Science Techno has no effect on the direction of Givaudan i.e., Givaudan and Light Science go up and down completely randomly.
Pair Corralation between Givaudan and Light Science
Assuming the 90 days trading horizon Givaudan SA is expected to under-perform the Light Science. But the stock apears to be less risky and, when comparing its historical volatility, Givaudan SA is 3.36 times less risky than Light Science. The stock trades about -0.19 of its potential returns per unit of risk. The Light Science Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 260.00 in Light Science Technologies on October 14, 2024 and sell it today you would earn a total of 5.00 from holding Light Science Technologies or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Givaudan SA vs. Light Science Technologies
Performance |
| Timeline |
| Givaudan SA |
| Light Science Techno |
Givaudan and Light Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Light Science
The main advantage of trading using opposite Givaudan and Light Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Light Science 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 Light Science will offset losses from the drop in Light Science's long position.| Givaudan vs. Light Science Technologies | Givaudan vs. Smarttech247 Group PLC | Givaudan vs. Polar Capital Technology | Givaudan vs. PureTech Health plc |
| Light Science vs. SupplyMe Capital PLC | Light Science vs. SM Energy Co | Light Science vs. FuelCell Energy | Light Science vs. Grand Vision Media |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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