Correlation Between Grupo Sports and Sanofi

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

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

Diversification Opportunities for Grupo Sports and Sanofi

-0.76

Correlation Coefficient

Grupo Sports  Sanofi

Pay attention - limited upside

The 3 months correlation between Grupo and Sanofi is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World and Sanofi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi and Grupo Sports 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 Grupo Sports World are associated (or correlated) with Sanofi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi has no effect on the direction of Grupo Sports i.e., Grupo Sports and Sanofi go up and down completely randomly.

Pair Corralation between Grupo Sports and Sanofi

Assuming the 90 days trading horizon Grupo Sports World is expected to under-perform the Sanofi. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Sports World is 9.63 times less risky than Sanofi. The stock trades about -0.26 of its potential returns per unit of risk. The Sanofi is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  97,700  in Sanofi on October 8, 2024 and sell it today you would earn a total of  2,650  from holding Sanofi or generate 2.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.89%
Values	Daily Returns

Grupo Sports World  vs.  Sanofi

Grupo Sports World

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Sports World are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Grupo Sports sustained solid returns over the last few months and may actually be approaching a breakup point.

Sanofi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sanofi has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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 Grupo Sports and Sanofi

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

The idea behind Grupo Sports World and Sanofi 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.