Correlation Between Lonza Group and Givaudan
Can any of the company-specific risk be diversified away by investing in both Lonza 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 Lonza Group and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lonza Group AG and Givaudan SA, you can compare the effects of market volatilities on Lonza 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 Lonza Group with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lonza Group and Givaudan.
Diversification Opportunities for Lonza Group and Givaudan
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lonza and Givaudan is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Lonza Group AG and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Lonza 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 Lonza Group AG 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 Lonza Group i.e., Lonza Group and Givaudan go up and down completely randomly.
Pair Corralation between Lonza Group and Givaudan
Assuming the 90 days trading horizon Lonza Group AG is expected to generate 0.87 times more return on investment than Givaudan. However, Lonza Group AG is 1.15 times less risky than Givaudan. It trades about 0.3 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.04 per unit of risk. If you would invest 53,400 in Lonza Group AG on November 3, 2024 and sell it today you would earn a total of 4,800 from holding Lonza Group AG or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Lonza Group AG vs. Givaudan SA
Performance |
| Timeline |
| Lonza Group AG |
| Givaudan SA |
Lonza Group and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lonza Group and Givaudan
The main advantage of trading using opposite Lonza Group and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lonza 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.| Lonza Group vs. Sika AG | Lonza Group vs. Givaudan SA | Lonza Group vs. Geberit AG | Lonza Group vs. Swiss Life Holding |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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