Correlation Between Western India and SANOFI S

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

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

Diversification Opportunities for Western India and SANOFI S

0.29

Correlation Coefficient

Western India  SANOFI S

Modest diversification

The 3 months correlation between Western and SANOFI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding The Western India 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 Western India 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 The Western India 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 Western India i.e., Western India and SANOFI S go up and down completely randomly.

Pair Corralation between Western India and SANOFI S

Assuming the 90 days trading horizon The Western India is expected to generate 3.58 times more return on investment than SANOFI S. However, Western India is 3.58 times more volatile than SANOFI S HEALTHC. It trades about 0.23 of its potential returns per unit of risk. SANOFI S HEALTHC is currently generating about 0.12 per unit of risk. If you would invest  20,682  in The Western India on October 5, 2024 and sell it today you would earn a total of  3,236  from holding The Western India or generate 15.65% return on investment over 90 days.

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

The Western India  vs.  SANOFI S HEALTHC

Western India

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Western India are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Western India unveiled solid returns over the last few months and may actually be approaching a breakup point.

SANOFI S HEALTHC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SANOFI S HEALTHC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Western India and SANOFI S

The main advantage of trading using opposite Western India and SANOFI S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western India 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 The Western India 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.