Correlation Between SANOFI S and Shyam Telecom

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

Diversification Opportunities for SANOFI S and Shyam Telecom

0.04

Correlation Coefficient

SANOFI S  Shyam Telecom

Significant diversification

The 3 months correlation between SANOFI and Shyam is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding SANOFI S HEALTHC and Shyam Telecom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyam Telecom Limited 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 Shyam Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shyam Telecom Limited has no effect on the direction of SANOFI S i.e., SANOFI S and Shyam Telecom go up and down completely randomly.

Pair Corralation between SANOFI S and Shyam Telecom

Assuming the 90 days trading horizon SANOFI S HEALTHC is expected to generate 0.22 times more return on investment than Shyam Telecom. However, SANOFI S HEALTHC is 4.54 times less risky than Shyam Telecom. It trades about 0.01 of its potential returns per unit of risk. Shyam Telecom Limited is currently generating about -0.04 per unit of risk. If you would invest  471,655  in SANOFI S HEALTHC on October 27, 2024 and sell it today you would earn a total of  1,520  from holding SANOFI S HEALTHC or generate 0.32% return on investment over 90 days.

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

SANOFI S HEALTHC  vs.  Shyam Telecom 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.

Shyam Telecom Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shyam Telecom Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SANOFI S and Shyam Telecom

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

The idea behind SANOFI S HEALTHC and Shyam Telecom 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .