Correlation Between SANOFI S and Mangalam Drugs

Can any of the company-specific risk be diversified away by investing in both SANOFI S and Mangalam Drugs 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 Mangalam Drugs 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 Mangalam Drugs And, you can compare the effects of market volatilities on SANOFI S and Mangalam Drugs 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 Mangalam Drugs. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANOFI S and Mangalam Drugs.

Diversification Opportunities for SANOFI S and Mangalam Drugs

0.6

Correlation Coefficient

SANOFI S  Mangalam Drugs

Poor diversification

The 3 months correlation between SANOFI and Mangalam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding SANOFI S HEALTHC and Mangalam Drugs And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangalam Drugs And 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 Mangalam Drugs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangalam Drugs And has no effect on the direction of SANOFI S i.e., SANOFI S and Mangalam Drugs go up and down completely randomly.

Pair Corralation between SANOFI S and Mangalam Drugs

Assuming the 90 days trading horizon SANOFI S HEALTHC is expected to generate 0.32 times more return on investment than Mangalam Drugs. However, SANOFI S HEALTHC is 3.08 times less risky than Mangalam Drugs. It trades about -0.11 of its potential returns per unit of risk. Mangalam Drugs And is currently generating about -0.17 per unit of risk. If you would invest  479,935  in SANOFI S HEALTHC on December 1, 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	Significant
Accuracy	100.0%
Values	Daily Returns

SANOFI S HEALTHC  vs.  Mangalam Drugs And

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

Mangalam Drugs And

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mangalam Drugs And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with SANOFI S and Mangalam Drugs

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

The idea behind SANOFI S HEALTHC and Mangalam Drugs And 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.