Correlation Between Sanofi ADR and Chugai Pharmaceutical

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

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

Diversification Opportunities for Sanofi ADR and Chugai Pharmaceutical

0.8

Correlation Coefficient

Sanofi ADR  Chugai Pharmaceutical

Very poor diversification

The 3 months correlation between Sanofi and Chugai is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR and Chugai Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chugai Pharmaceutical and Sanofi ADR 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 ADR are associated (or correlated) with Chugai Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chugai Pharmaceutical has no effect on the direction of Sanofi ADR i.e., Sanofi ADR and Chugai Pharmaceutical go up and down completely randomly.

Pair Corralation between Sanofi ADR and Chugai Pharmaceutical

Considering the 90-day investment horizon Sanofi ADR is expected to generate 0.31 times more return on investment than Chugai Pharmaceutical. However, Sanofi ADR is 3.26 times less risky than Chugai Pharmaceutical. It trades about -0.13 of its potential returns per unit of risk. Chugai Pharmaceutical Co is currently generating about -0.11 per unit of risk. If you would invest  4,782  in Sanofi ADR on September 15, 2024 and sell it today you would lose (102.00) from holding Sanofi ADR or give up 2.13% of portfolio value over 90 days.

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

Sanofi ADR  vs.  Chugai Pharmaceutical Co

Sanofi ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanofi ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Chugai Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chugai Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental 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 ADR and Chugai Pharmaceutical

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

The idea behind Sanofi ADR and Chugai Pharmaceutical Co 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.