Correlation Between Givaudan and Synthomer Plc
Can any of the company-specific risk be diversified away by investing in both Givaudan and Synthomer Plc 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 Synthomer Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Synthomer plc, you can compare the effects of market volatilities on Givaudan and Synthomer Plc 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 Synthomer Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Synthomer Plc.
Diversification Opportunities for Givaudan and Synthomer Plc
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Givaudan and Synthomer is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Synthomer plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synthomer 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 Synthomer Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synthomer plc has no effect on the direction of Givaudan i.e., Givaudan and Synthomer Plc go up and down completely randomly.
Pair Corralation between Givaudan and Synthomer Plc
Assuming the 90 days trading horizon Givaudan SA is expected to generate 0.39 times more return on investment than Synthomer Plc. However, Givaudan SA is 2.59 times less risky than Synthomer Plc. It trades about -0.04 of its potential returns per unit of risk. Synthomer plc is currently generating about -0.14 per unit of risk. If you would invest 419,250 in Givaudan SA on August 29, 2024 and sell it today you would lose (29,350) from holding Givaudan SA or give up 7.0% 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. Synthomer plc
Performance |
| Timeline |
| Givaudan SA |
| Synthomer plc |
Givaudan and Synthomer Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Synthomer Plc
The main advantage of trading using opposite Givaudan and Synthomer Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Synthomer Plc 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 Synthomer Plc will offset losses from the drop in Synthomer Plc's long position.| Givaudan vs. Albion Technology General | Givaudan vs. Kaufman Et Broad | Givaudan vs. Pfeiffer Vacuum Technology | Givaudan vs. Take Two Interactive Software |
| Synthomer Plc vs. Atalaya Mining | Synthomer Plc vs. Anglo Asian Mining | Synthomer Plc 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |