Correlation Between Caledonia Mining and Givaudan
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining 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 Caledonia Mining and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Givaudan SA, you can compare the effects of market volatilities on Caledonia Mining 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 Caledonia Mining with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Givaudan.
Diversification Opportunities for Caledonia Mining and Givaudan
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caledonia and Givaudan is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining i.e., Caledonia Mining and Givaudan go up and down completely randomly.
Pair Corralation between Caledonia Mining and Givaudan
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the Givaudan. In addition to that, Caledonia Mining is 2.46 times more volatile than Givaudan SA. It trades about -0.45 of its total potential returns per unit of risk. Givaudan SA is currently generating about -0.26 per unit of volatility. 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 |
Caledonia Mining vs. Givaudan SA
Performance |
| Timeline |
| Caledonia Mining |
| Givaudan SA |
Caledonia Mining and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Mining and Givaudan
The main advantage of trading using opposite Caledonia Mining and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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.| Caledonia Mining vs. Givaudan SA | Caledonia Mining vs. Antofagasta PLC | Caledonia Mining vs. Amaroq Minerals | Caledonia Mining vs. Central Asia Metals |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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