Correlation Between Givaudan and Zug Estates
Can any of the company-specific risk be diversified away by investing in both Givaudan and Zug Estates 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 Zug Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Zug Estates Holding, you can compare the effects of market volatilities on Givaudan and Zug Estates 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 Zug Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Zug Estates.
Diversification Opportunities for Givaudan and Zug Estates
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Givaudan and Zug is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Zug Estates Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zug Estates Holding 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 Zug Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zug Estates Holding has no effect on the direction of Givaudan i.e., Givaudan and Zug Estates go up and down completely randomly.
Pair Corralation between Givaudan and Zug Estates
Assuming the 90 days trading horizon Givaudan SA is expected to under-perform the Zug Estates. But the stock apears to be less risky and, when comparing its historical volatility, Givaudan SA is 1.04 times less risky than Zug Estates. The stock trades about -0.26 of its potential returns per unit of risk. The Zug Estates Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 189,500 in Zug Estates Holding on August 28, 2024 and sell it today you would earn a total of 5,000 from holding Zug Estates Holding or generate 2.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Givaudan SA vs. Zug Estates Holding
Performance |
| Timeline |
| Givaudan SA |
| Zug Estates Holding |
Givaudan and Zug Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Zug Estates
The main advantage of trading using opposite Givaudan and Zug Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Zug Estates 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 Zug Estates will offset losses from the drop in Zug Estates' long position.The idea behind Givaudan SA and Zug Estates Holding 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.| Zug Estates vs. Allreal Holding | Zug Estates vs. PSP Swiss Property | Zug Estates vs. Mobimo Hldg | Zug Estates vs. Swiss Prime Site |
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 Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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