Correlation Between India Glycols and SANOFI S

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

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

Diversification Opportunities for India Glycols and SANOFI S

0.57

Correlation Coefficient

India Glycols  SANOFI S

Very weak diversification

The 3 months correlation between India and SANOFI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding India Glycols Limited 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 India Glycols 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 India Glycols Limited 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 India Glycols i.e., India Glycols and SANOFI S go up and down completely randomly.

Pair Corralation between India Glycols and SANOFI S

Assuming the 90 days trading horizon India Glycols Limited is expected to under-perform the SANOFI S. In addition to that, India Glycols is 4.26 times more volatile than SANOFI S HEALTHC. It trades about -0.11 of its total potential returns per unit of risk. SANOFI S HEALTHC is currently generating about -0.1 per unit of volatility. If you would invest  479,935  in SANOFI S HEALTHC on December 2, 2024 and sell it today you would lose (24,695) from holding SANOFI S HEALTHC or give up 5.15% of portfolio value over 90 days.

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

India Glycols Limited  vs.  SANOFI S HEALTHC

India Glycols Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days India Glycols Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

SANOFI S HEALTHC

Risk-Adjusted Performance

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with India Glycols and SANOFI S

The main advantage of trading using opposite India Glycols and SANOFI S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if India Glycols 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 India Glycols Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.