Correlation Between Union Bank and SANOFI S

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

By analyzing existing cross correlation between Union Bank of and SANOFI S HEALTHC, you can compare the effects of market volatilities on Union Bank and SANOFI S 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 Union Bank with a short position of SANOFI S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Bank and SANOFI S.

Diversification Opportunities for Union Bank and SANOFI S

0.04

Correlation Coefficient

Union Bank  SANOFI S

Significant diversification

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

Pair Corralation between Union Bank and SANOFI S

Assuming the 90 days trading horizon Union Bank of is expected to under-perform the SANOFI S. In addition to that, Union Bank is 2.36 times more volatile than SANOFI S HEALTHC. It trades about -0.29 of its total potential returns per unit of risk. SANOFI S HEALTHC is currently generating about 0.06 per unit of volatility. If you would invest  483,240  in SANOFI S HEALTHC on October 9, 2024 and sell it today you would earn a total of  5,225  from holding SANOFI S HEALTHC or generate 1.08% return on investment over 90 days.

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

Union Bank of  vs.  SANOFI S HEALTHC

Union Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Union Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Union Bank and SANOFI S

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

The idea behind Union Bank of and SANOFI S HEALTHC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.