Correlation Between Sanofi SA and Bonduelle SCA

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

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

Diversification Opportunities for Sanofi SA and Bonduelle SCA

0.47

Correlation Coefficient

Sanofi SA  Bonduelle SCA

Very weak diversification

The 3 months correlation between Sanofi and Bonduelle is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi SA and Bonduelle SCA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonduelle SCA and Sanofi SA 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 Sanofi SA are associated (or correlated) with Bonduelle SCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonduelle SCA has no effect on the direction of Sanofi SA i.e., Sanofi SA and Bonduelle SCA go up and down completely randomly.

Pair Corralation between Sanofi SA and Bonduelle SCA

Assuming the 90 days trading horizon Sanofi SA is expected to generate 2.69 times less return on investment than Bonduelle SCA. But when comparing it to its historical volatility, Sanofi SA is 2.28 times less risky than Bonduelle SCA. It trades about 0.14 of its potential returns per unit of risk. Bonduelle SCA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  621.00  in Bonduelle SCA on December 28, 2024 and sell it today you would earn a total of  162.00  from holding Bonduelle SCA or generate 26.09% return on investment over 90 days.

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

Sanofi SA  vs.  Bonduelle SCA

Sanofi SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sanofi SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanofi SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Bonduelle SCA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bonduelle SCA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bonduelle SCA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanofi SA and Bonduelle SCA

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

The idea behind Sanofi SA and Bonduelle SCA 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.