Correlation Between Arcontech Group and Givaudan
Can any of the company-specific risk be diversified away by investing in both Arcontech 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 Arcontech Group and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arcontech Group Plc and Givaudan SA, you can compare the effects of market volatilities on Arcontech 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 Arcontech Group with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcontech Group and Givaudan.
Diversification Opportunities for Arcontech Group and Givaudan
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Arcontech and Givaudan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arcontech Group Plc and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Arcontech 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 Arcontech Group Plc 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 Arcontech Group i.e., Arcontech Group and Givaudan go up and down completely randomly.
Pair Corralation between Arcontech Group and Givaudan
Assuming the 90 days trading horizon Arcontech Group Plc is expected to generate 1.75 times more return on investment than Givaudan. However, Arcontech Group is 1.75 times more volatile than Givaudan SA. It trades about -0.01 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.07 per unit of risk. If you would invest 11,634 in Arcontech Group Plc on November 2, 2024 and sell it today you would lose (484.00) from holding Arcontech Group Plc or give up 4.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.06% |
| Values | Daily Returns |
Arcontech Group Plc vs. Givaudan SA
Performance |
| Timeline |
| Arcontech Group Plc |
| Givaudan SA |
Arcontech Group and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arcontech Group and Givaudan
The main advantage of trading using opposite Arcontech Group and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcontech 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.| Arcontech Group vs. China Pacific Insurance | Arcontech Group vs. Cairo Communication SpA | Arcontech Group vs. Spirent Communications plc | Arcontech Group vs. Verizon Communications |
| Givaudan vs. BE Semiconductor Industries | Givaudan vs. Ross Stores | Givaudan vs. British American Tobacco | Givaudan vs. Waste Management |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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