Correlation Between Clean Science and SANOFI S

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

By analyzing existing cross correlation between Clean Science and and SANOFI S HEALTHC, you can compare the effects of market volatilities on Clean Science and SANOFI S 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 Clean Science with a short position of SANOFI S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Science and SANOFI S.

Diversification Opportunities for Clean Science and SANOFI S

0.4

Correlation Coefficient

Clean Science  SANOFI S

Very weak diversification

The 3 months correlation between Clean and SANOFI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Clean Science and and SANOFI S HEALTHC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOFI S HEALTHC and Clean Science 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 Clean Science and are associated (or correlated) with SANOFI S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOFI S HEALTHC has no effect on the direction of Clean Science i.e., Clean Science and SANOFI S go up and down completely randomly.

Pair Corralation between Clean Science and SANOFI S

Assuming the 90 days trading horizon Clean Science and is expected to under-perform the SANOFI S. In addition to that, Clean Science is 1.07 times more volatile than SANOFI S HEALTHC. It trades about -0.13 of its total potential returns per unit of risk. SANOFI S HEALTHC is currently generating about -0.01 per unit of volatility. If you would invest  490,350  in SANOFI S HEALTHC on September 4, 2024 and sell it today you would lose (10,415) from holding SANOFI S HEALTHC or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

Clean Science and  vs.  SANOFI S HEALTHC

Clean Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Science and 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

SANOFI S HEALTHC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANOFI S HEALTHC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SANOFI S is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Clean Science and SANOFI S

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

The idea behind Clean Science and and SANOFI S HEALTHC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.