Correlation Between SANOFI S and Hindustan Copper

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

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

Diversification Opportunities for SANOFI S and Hindustan Copper

0.73

Correlation Coefficient

SANOFI S  Hindustan Copper

Poor diversification

The 3 months correlation between SANOFI and Hindustan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SANOFI S HEALTHC and Hindustan Copper Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Copper and SANOFI S 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 S HEALTHC are associated (or correlated) with Hindustan Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Copper has no effect on the direction of SANOFI S i.e., SANOFI S and Hindustan Copper go up and down completely randomly.

Pair Corralation between SANOFI S and Hindustan Copper

Assuming the 90 days trading horizon SANOFI S HEALTHC is expected to under-perform the Hindustan Copper. But the stock apears to be less risky and, when comparing its historical volatility, SANOFI S HEALTHC is 1.9 times less risky than Hindustan Copper. The stock trades about -0.01 of its potential returns per unit of risk. The Hindustan Copper Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,488  in Hindustan Copper Limited on September 27, 2024 and sell it today you would earn a total of  16,577  from holding Hindustan Copper Limited or generate 144.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	14.78%
Values	Daily Returns

SANOFI S HEALTHC  vs.  Hindustan Copper Limited

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.

Hindustan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hindustan Copper Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with SANOFI S and Hindustan Copper

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

The idea behind SANOFI S HEALTHC and Hindustan Copper Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.