Correlation Between Sanofi ADR and Ono Pharmaceutical

Can any of the company-specific risk be diversified away by investing in both Sanofi ADR and Ono 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 Ono 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 Ono Pharmaceutical Co, you can compare the effects of market volatilities on Sanofi ADR and Ono 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 Ono Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi ADR and Ono Pharmaceutical.

Diversification Opportunities for Sanofi ADR and Ono Pharmaceutical

-0.4

Correlation Coefficient

Sanofi ADR  Ono Pharmaceutical

Very good diversification

The 3 months correlation between Sanofi and Ono is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR and Ono Pharmaceutical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ono 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 Ono Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ono Pharmaceutical has no effect on the direction of Sanofi ADR i.e., Sanofi ADR and Ono Pharmaceutical go up and down completely randomly.

Pair Corralation between Sanofi ADR and Ono Pharmaceutical

Considering the 90-day investment horizon Sanofi ADR is expected to generate 1.11 times more return on investment than Ono Pharmaceutical. However, Sanofi ADR is 1.11 times more volatile than Ono Pharmaceutical Co. It trades about 0.2 of its potential returns per unit of risk. Ono Pharmaceutical Co is currently generating about -0.07 per unit of risk. If you would invest  4,801  in Sanofi ADR on December 4, 2024 and sell it today you would earn a total of  969.00  from holding Sanofi ADR or generate 20.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Sanofi ADR  vs.  Ono Pharmaceutical Co

Sanofi ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sanofi ADR are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Sanofi ADR showed solid returns over the last few months and may actually be approaching a breakup point.

Ono Pharmaceutical

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Sanofi ADR and Ono 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.