Correlation Between Procter Gamble and SANOFI CONS

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

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

Diversification Opportunities for Procter Gamble and SANOFI CONS

-0.14

Correlation Coefficient

Procter Gamble  SANOFI CONS

Good diversification

The 3 months correlation between Procter and SANOFI is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble Health 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 Procter Gamble 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 Procter Gamble Health are associated (or correlated) with SANOFI CONS. 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 Procter Gamble i.e., Procter Gamble and SANOFI CONS go up and down completely randomly.

Pair Corralation between Procter Gamble and SANOFI CONS

Assuming the 90 days trading horizon Procter Gamble Health is expected to generate 1.84 times more return on investment than SANOFI CONS. However, Procter Gamble is 1.84 times more volatile than SANOFI S HEALTHC. It trades about 0.0 of its potential returns per unit of risk. SANOFI S HEALTHC is currently generating about -0.03 per unit of risk. If you would invest  504,579  in Procter Gamble Health on December 28, 2024 and sell it today you would lose (4,319) from holding Procter Gamble Health or give up 0.86% of portfolio value over 90 days.

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

Procter Gamble Health  vs.  SANOFI S HEALTHC

Procter Gamble Health

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Procter Gamble and SANOFI CONS

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

The idea behind Procter Gamble Health 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.