Correlation Between Givaudan and Kering SA
Can any of the company-specific risk be diversified away by investing in both Givaudan and Kering SA 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 Kering SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Kering SA, you can compare the effects of market volatilities on Givaudan and Kering SA 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 Kering SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Kering SA.
Diversification Opportunities for Givaudan and Kering SA
Very weak diversification
The 3 months correlation between Givaudan and Kering is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Kering SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kering SA 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 Kering SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kering SA has no effect on the direction of Givaudan i.e., Givaudan and Kering SA go up and down completely randomly.
Pair Corralation between Givaudan and Kering SA
Assuming the 90 days trading horizon Givaudan is expected to generate 3.75 times less return on investment than Kering SA. But when comparing it to its historical volatility, Givaudan SA is 2.54 times less risky than Kering SA. It trades about 0.08 of its potential returns per unit of risk. Kering SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 22,390 in Kering SA on September 12, 2024 and sell it today you would earn a total of 1,575 from holding Kering SA or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Givaudan SA vs. Kering SA
Performance |
| Timeline |
| Givaudan SA |
| Kering SA |
Givaudan and Kering SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Kering SA
The main advantage of trading using opposite Givaudan and Kering SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Kering SA 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 Kering SA will offset losses from the drop in Kering SA's long position.The idea behind Givaudan SA and Kering SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Kering SA vs. Hermes International SCA | Kering SA vs. LVMH Mot Hennessy | Kering SA vs. LOreal SA | Kering SA vs. Pernod Ricard SA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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