Correlation Between Adecco Group and Givaudan
Can any of the company-specific risk be diversified away by investing in both Adecco Group and Givaudan 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 Adecco Group and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adecco Group AG and Givaudan SA, you can compare the effects of market volatilities on Adecco Group and Givaudan 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 Adecco Group with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adecco Group and Givaudan.
Diversification Opportunities for Adecco Group and Givaudan
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adecco and Givaudan is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Adecco Group AG and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Adecco Group 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 Adecco Group AG are associated (or correlated) with Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Adecco Group i.e., Adecco Group and Givaudan go up and down completely randomly.
Pair Corralation between Adecco Group and Givaudan
Assuming the 90 days trading horizon Adecco Group AG is expected to under-perform the Givaudan. In addition to that, Adecco Group is 1.36 times more volatile than Givaudan SA. It trades about -0.51 of its total potential returns per unit of risk. Givaudan SA is currently generating about -0.28 per unit of volatility. If you would invest 419,300 in Givaudan SA on August 29, 2024 and sell it today you would lose (31,000) from holding Givaudan SA or give up 7.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adecco Group AG vs. Givaudan SA
Performance |
| Timeline |
| Adecco Group AG |
| Givaudan SA |
Adecco Group and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adecco Group and Givaudan
The main advantage of trading using opposite Adecco Group and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adecco Group position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Adecco Group vs. Swisscom AG | Adecco Group vs. Swiss Life Holding | Adecco Group vs. Swiss Re AG | Adecco Group vs. ABB |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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