Correlation Between Givaudan and Sabre Insurance

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

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

Diversification Opportunities for Givaudan and Sabre Insurance

0.85

Correlation Coefficient

Givaudan  Sabre Insurance

Very poor diversification

The 3 months correlation between Givaudan and Sabre is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Sabre Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabre Insurance Group and Givaudan 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 Givaudan SA are associated (or correlated) with Sabre Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabre Insurance Group has no effect on the direction of Givaudan i.e., Givaudan and Sabre Insurance go up and down completely randomly.

Pair Corralation between Givaudan and Sabre Insurance

Assuming the 90 days trading horizon Givaudan SA is expected to under-perform the Sabre Insurance. But the stock apears to be less risky and, when comparing its historical volatility, Givaudan SA is 1.51 times less risky than Sabre Insurance. The stock trades about -0.19 of its potential returns per unit of risk. The Sabre Insurance Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  14,140  in Sabre Insurance Group on September 12, 2024 and sell it today you would lose (80.00) from holding Sabre Insurance Group or give up 0.57% of portfolio value over 90 days.

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

Givaudan SA  vs.  Sabre Insurance Group

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.

Sabre Insurance Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sabre Insurance Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sabre Insurance is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Givaudan and Sabre Insurance

The main advantage of trading using opposite Givaudan and Sabre Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan position performs unexpectedly, Sabre Insurance 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 Sabre Insurance will offset losses from the drop in Sabre Insurance's long position.

The idea behind Givaudan SA and Sabre Insurance Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.