Correlation Between ABM International and SANOFI S

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Can any of the company-specific risk be diversified away by investing in both ABM International 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 ABM International and SANOFI S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABM International Limited and SANOFI S HEALTHC, you can compare the effects of market volatilities on ABM International 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 ABM International with a short position of SANOFI S. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABM International and SANOFI S.

Diversification Opportunities for ABM International and SANOFI S

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between ABM and SANOFI is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding ABM International Limited 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 ABM International 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 ABM International Limited 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 ABM International i.e., ABM International and SANOFI S go up and down completely randomly.

Pair Corralation between ABM International and SANOFI S

Assuming the 90 days trading horizon ABM International Limited is expected to generate 2.21 times more return on investment than SANOFI S. However, ABM International is 2.21 times more volatile than SANOFI S HEALTHC. It trades about 0.04 of its potential returns per unit of risk. SANOFI S HEALTHC is currently generating about -0.01 per unit of risk. If you would invest  5,400  in ABM International Limited on September 2, 2024 and sell it today you would earn a total of  1,828  from holding ABM International Limited or generate 33.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy15.36%
ValuesDaily Returns

ABM International Limited  vs.  SANOFI S HEALTHC

 Performance 
       Timeline  
ABM International 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in ABM International Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, ABM International disclosed solid returns over the last few months and may actually be approaching a breakup point.
SANOFI S HEALTHC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.

ABM International and SANOFI S Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ABM International and SANOFI S

The main advantage of trading using opposite ABM International and SANOFI S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABM International 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.
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The idea behind ABM International Limited 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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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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