Correlation Between Straumann Holding and Givaudan
Can any of the company-specific risk be diversified away by investing in both Straumann Holding 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 Straumann Holding and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Straumann Holding AG and Givaudan SA, you can compare the effects of market volatilities on Straumann Holding 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 Straumann Holding with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Straumann Holding and Givaudan.
Diversification Opportunities for Straumann Holding and Givaudan
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Straumann and Givaudan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Straumann Holding AG and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Straumann Holding 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 Straumann Holding 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 Straumann Holding i.e., Straumann Holding and Givaudan go up and down completely randomly.
Pair Corralation between Straumann Holding and Givaudan
Assuming the 90 days trading horizon Straumann Holding AG is expected to under-perform the Givaudan. In addition to that, Straumann Holding is 1.71 times more volatile than Givaudan SA. It trades about -0.02 of its total potential returns per unit of risk. Givaudan SA is currently generating about 0.07 per unit of volatility. If you would invest 292,375 in Givaudan SA on August 28, 2024 and sell it today you would earn a total of 97,725 from holding Givaudan SA or generate 33.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Straumann Holding AG vs. Givaudan SA
Performance |
| Timeline |
| Straumann Holding |
| Givaudan SA |
Straumann Holding and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Straumann Holding and Givaudan
The main advantage of trading using opposite Straumann Holding and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Straumann Holding 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.| Straumann Holding vs. Sonova H Ag | Straumann Holding vs. Sika AG | Straumann Holding vs. Lonza Group AG | Straumann Holding vs. Givaudan SA |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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