Correlation Between Cembra Money and Givaudan

Can any of the company-specific risk be diversified away by investing in both Cembra Money 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 Cembra Money and Givaudan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cembra Money Bank and Givaudan SA, you can compare the effects of market volatilities on Cembra Money 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 Cembra Money with a short position of Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cembra Money and Givaudan.

Diversification Opportunities for Cembra Money and Givaudan

-0.63

Correlation Coefficient

Cembra Money  Givaudan

Excellent diversification

The 3 months correlation between Cembra and Givaudan is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cembra Money Bank and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA and Cembra Money 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 Cembra Money Bank 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 Cembra Money i.e., Cembra Money and Givaudan go up and down completely randomly.

Pair Corralation between Cembra Money and Givaudan

Assuming the 90 days trading horizon Cembra Money Bank is expected to generate 0.74 times more return on investment than Givaudan. However, Cembra Money Bank is 1.35 times less risky than Givaudan. It trades about 0.17 of its potential returns per unit of risk. Givaudan SA is currently generating about -0.19 per unit of risk. If you would invest  7,660  in Cembra Money Bank on September 12, 2024 and sell it today you would earn a total of  690.00  from holding Cembra Money Bank or generate 9.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cembra Money Bank  vs.  Givaudan SA

Cembra Money Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cembra Money Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cembra Money may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Givaudan SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Givaudan SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cembra Money and Givaudan

The main advantage of trading using opposite Cembra Money and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cembra Money 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.

The idea behind Cembra Money Bank and Givaudan SA 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.

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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.