Correlation Between SIKA AG and International Flavors
Can any of the company-specific risk be diversified away by investing in both SIKA AG and International Flavors 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 SIKA AG and International Flavors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SIKA AG UNSPADR and International Flavors Fragrances, you can compare the effects of market volatilities on SIKA AG and International Flavors 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 SIKA AG with a short position of International Flavors. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIKA AG and International Flavors.
Diversification Opportunities for SIKA AG and International Flavors
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SIKA and International is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SIKA AG UNSPADR and International Flavors Fragranc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Flavors and SIKA AG 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 SIKA AG UNSPADR are associated (or correlated) with International Flavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Flavors has no effect on the direction of SIKA AG i.e., SIKA AG and International Flavors go up and down completely randomly.
Pair Corralation between SIKA AG and International Flavors
Assuming the 90 days trading horizon SIKA AG UNSPADR is expected to under-perform the International Flavors. But the stock apears to be less risky and, when comparing its historical volatility, SIKA AG UNSPADR is 2.02 times less risky than International Flavors. The stock trades about -0.23 of its potential returns per unit of risk. The International Flavors Fragrances is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 9,384 in International Flavors Fragrances on August 27, 2024 and sell it today you would lose (760.00) from holding International Flavors Fragrances or give up 8.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SIKA AG UNSPADR vs. International Flavors Fragranc
Performance |
| Timeline |
| SIKA AG UNSPADR |
| International Flavors |
SIKA AG and International Flavors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SIKA AG and International Flavors
The main advantage of trading using opposite SIKA AG and International Flavors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIKA AG position performs unexpectedly, International Flavors 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 International Flavors will offset losses from the drop in International Flavors' long position.| SIKA AG vs. CONAGRA FOODS | SIKA AG vs. SPORT LISBOA E | SIKA AG vs. Fukuyama Transporting Co | SIKA AG vs. TITANIUM TRANSPORTGROUP |
| International Flavors vs. DXC Technology Co | International Flavors vs. Clearside Biomedical | International Flavors vs. IMAGIN MEDICAL INC | International Flavors vs. SMA Solar Technology |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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