Correlation Between SANOFI S and State Bank

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

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

Diversification Opportunities for SANOFI S and State Bank

-0.35

Correlation Coefficient

SANOFI S  State Bank

Very good diversification

The 3 months correlation between SANOFI and State is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SANOFI S HEALTHC and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and SANOFI S 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 S HEALTHC are associated (or correlated) with State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of SANOFI S i.e., SANOFI S and State Bank go up and down completely randomly.

Pair Corralation between SANOFI S and State Bank

Assuming the 90 days trading horizon SANOFI S HEALTHC is expected to under-perform the State Bank. But the stock apears to be less risky and, when comparing its historical volatility, SANOFI S HEALTHC is 3.95 times less risky than State Bank. The stock trades about -0.16 of its potential returns per unit of risk. The State Bank of is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  82,670  in State Bank of on September 13, 2024 and sell it today you would earn a total of  3,490  from holding State Bank of or generate 4.22% return on investment over 90 days.

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

SANOFI S HEALTHC  vs.  State Bank of

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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

State Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, State Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SANOFI S and State Bank

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

The idea behind SANOFI S HEALTHC and State Bank of 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..