Correlation Between Givaudan and Atalaya Mining

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

By analyzing existing cross correlation between Givaudan SA and Atalaya Mining, you can compare the effects of market volatilities on Givaudan and Atalaya Mining 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 Atalaya Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Atalaya Mining.

Diversification Opportunities for Givaudan and Atalaya Mining

0.22

Correlation Coefficient

Givaudan  Atalaya Mining

Modest diversification

The 3 months correlation between Givaudan and Atalaya is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Atalaya Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atalaya Mining 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 Atalaya Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atalaya Mining has no effect on the direction of Givaudan i.e., Givaudan and Atalaya Mining go up and down completely randomly.

Pair Corralation between Givaudan and Atalaya Mining

Assuming the 90 days trading horizon Givaudan SA is expected to generate 0.5 times more return on investment than Atalaya Mining. However, Givaudan SA is 2.0 times less risky than Atalaya Mining. It trades about 0.14 of its potential returns per unit of risk. Atalaya Mining is currently generating about 0.04 per unit of risk. If you would invest  322,835  in Givaudan SA on June 20, 2024 and sell it today you would earn a total of  124,915  from holding Givaudan SA or generate 38.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.52%
Values	Daily Returns

Givaudan SA  vs.  Atalaya Mining

Givaudan SA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Givaudan SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Givaudan is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Atalaya Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atalaya Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Givaudan and Atalaya Mining

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

The idea behind Givaudan SA and Atalaya Mining 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.