Correlation Between Sanofi ADR and Kalbe Farma

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Can any of the company-specific risk be diversified away by investing in both Sanofi ADR and Kalbe Farma 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 Kalbe Farma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanofi ADR and Kalbe Farma Tbk, you can compare the effects of market volatilities on Sanofi ADR and Kalbe Farma 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 Kalbe Farma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi ADR and Kalbe Farma.

Diversification Opportunities for Sanofi ADR and Kalbe Farma

0.1
  Correlation Coefficient

Average diversification

The 3 months correlation between Sanofi and Kalbe is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi ADR and Kalbe Farma Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalbe Farma Tbk 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 Kalbe Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalbe Farma Tbk has no effect on the direction of Sanofi ADR i.e., Sanofi ADR and Kalbe Farma go up and down completely randomly.

Pair Corralation between Sanofi ADR and Kalbe Farma

If you would invest  4,821  in Sanofi ADR on December 29, 2023 and sell it today you would earn a total of  39.00  from holding Sanofi ADR or generate 0.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Sanofi ADR  vs.  Kalbe Farma Tbk

 Performance 
       Timeline  
Sanofi ADR 

Risk-Adjusted Performance

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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 fairly strong basic indicators, Sanofi ADR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Kalbe Farma Tbk 

Risk-Adjusted Performance

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Low
 
High
Very Weak
Over the last 90 days Kalbe Farma Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Sanofi ADR and Kalbe Farma Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sanofi ADR and Kalbe Farma

The main advantage of trading using opposite Sanofi ADR and Kalbe Farma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi ADR position performs unexpectedly, Kalbe Farma 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 Kalbe Farma will offset losses from the drop in Kalbe Farma's long position.
The idea behind Sanofi ADR and Kalbe Farma Tbk 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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