Correlation Between SANOFI CONS and Nazara Technologies

Can any of the company-specific risk be diversified away by investing in both SANOFI CONS and Nazara Technologies 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 CONS and Nazara Technologies 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 Nazara Technologies Limited, you can compare the effects of market volatilities on SANOFI CONS and Nazara Technologies 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 CONS with a short position of Nazara Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANOFI CONS and Nazara Technologies.

Diversification Opportunities for SANOFI CONS and Nazara Technologies

0.59

Correlation Coefficient

SANOFI CONS  Nazara Technologies

Very weak diversification

The 3 months correlation between SANOFI and Nazara is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SANOFI S HEALTHC and Nazara Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nazara Technologies and SANOFI CONS 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 Nazara Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nazara Technologies has no effect on the direction of SANOFI CONS i.e., SANOFI CONS and Nazara Technologies go up and down completely randomly.

Pair Corralation between SANOFI CONS and Nazara Technologies

Assuming the 90 days trading horizon SANOFI S HEALTHC is expected to generate 0.47 times more return on investment than Nazara Technologies. However, SANOFI S HEALTHC is 2.13 times less risky than Nazara Technologies. It trades about -0.04 of its potential returns per unit of risk. Nazara Technologies Limited is currently generating about -0.05 per unit of risk. If you would invest  488,200  in SANOFI S HEALTHC on December 27, 2024 and sell it today you would lose (13,135) from holding SANOFI S HEALTHC or give up 2.69% of portfolio value over 90 days.

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

SANOFI S HEALTHC  vs.  Nazara Technologies Limited

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

Nazara Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nazara Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with SANOFI CONS and Nazara Technologies

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

The idea behind SANOFI S HEALTHC and Nazara Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..