Correlation Between Swisscom and Givaudan
Can any of the company-specific risk be diversified away by investing in both Swisscom 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 Swisscom and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Swisscom AG and Givaudan SA, you can compare the effects of market volatilities on Swisscom 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 Swisscom with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Swisscom and Givaudan.
Diversification Opportunities for Swisscom and Givaudan
Poor diversification
The 3 months correlation between Swisscom and Givaudan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Swisscom AG and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Swisscom 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 Swisscom 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 Swisscom i.e., Swisscom and Givaudan go up and down completely randomly.
Pair Corralation between Swisscom and Givaudan
Assuming the 90 days trading horizon Swisscom AG is expected to under-perform the Givaudan. In addition to that, Swisscom is 1.02 times more volatile than Givaudan SA. It trades about -0.33 of its total potential returns per unit of risk. Givaudan SA is currently generating about -0.23 per unit of volatility. If you would invest 418,900 in Givaudan SA on August 25, 2024 and sell it today you would lose (25,600) from holding Givaudan SA or give up 6.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Swisscom AG vs. Givaudan SA
Performance |
| Timeline |
| Swisscom AG |
| Givaudan SA |
Swisscom and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Swisscom and Givaudan
The main advantage of trading using opposite Swisscom and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Swisscom 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.| Swisscom vs. Swiss Life Holding | Swisscom vs. Zurich Insurance Group | Swisscom vs. Swiss Re AG | Swisscom vs. ABB |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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