Correlation Between Givaudan and Chocoladefabriken
Can any of the company-specific risk be diversified away by investing in both Givaudan and Chocoladefabriken 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 Chocoladefabriken into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Chocoladefabriken Lindt Spruengli, you can compare the effects of market volatilities on Givaudan and Chocoladefabriken 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 Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Chocoladefabriken.
Diversification Opportunities for Givaudan and Chocoladefabriken
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Givaudan and Chocoladefabriken is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Chocoladefabriken Lindt Spruen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt 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 Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Givaudan i.e., Givaudan and Chocoladefabriken go up and down completely randomly.
Pair Corralation between Givaudan and Chocoladefabriken
Assuming the 90 days trading horizon Givaudan is expected to generate 6.57 times less return on investment than Chocoladefabriken. But when comparing it to its historical volatility, Givaudan SA is 1.95 times less risky than Chocoladefabriken. It trades about 0.03 of its potential returns per unit of risk. Chocoladefabriken Lindt Spruengli is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 999,000 in Chocoladefabriken Lindt Spruengli on October 23, 2024 and sell it today you would earn a total of 25,000 from holding Chocoladefabriken Lindt Spruengli or generate 2.5% 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. Chocoladefabriken Lindt Spruen
Performance |
| Timeline |
| Givaudan SA |
| Chocoladefabriken Lindt |
Givaudan and Chocoladefabriken Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Chocoladefabriken
The main advantage of trading using opposite Givaudan and Chocoladefabriken positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Chocoladefabriken 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 Chocoladefabriken will offset losses from the drop in Chocoladefabriken's long position.The idea behind Givaudan SA and Chocoladefabriken Lindt Spruengli 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.| Chocoladefabriken vs. Chocoladefabriken Lindt Spruengli | Chocoladefabriken vs. Barry Callebaut AG | Chocoladefabriken vs. Givaudan SA | Chocoladefabriken vs. Geberit AG |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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