Correlation Between Euroapi SAS and Sanofi SA
Can any of the company-specific risk be diversified away by investing in both Euroapi SAS and Sanofi SA 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 Euroapi SAS and Sanofi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euroapi SAS and Sanofi SA, you can compare the effects of market volatilities on Euroapi SAS and Sanofi SA 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 Euroapi SAS with a short position of Sanofi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euroapi SAS and Sanofi SA.
Diversification Opportunities for Euroapi SAS and Sanofi SA
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Euroapi and Sanofi is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Euroapi SAS and Sanofi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi SA and Euroapi SAS 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 Euroapi SAS are associated (or correlated) with Sanofi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi SA has no effect on the direction of Euroapi SAS i.e., Euroapi SAS and Sanofi SA go up and down completely randomly.
Pair Corralation between Euroapi SAS and Sanofi SA
Assuming the 90 days trading horizon Euroapi SAS is expected to generate 2.78 times more return on investment than Sanofi SA. However, Euroapi SAS is 2.78 times more volatile than Sanofi SA. It trades about 0.13 of its potential returns per unit of risk. Sanofi SA is currently generating about -0.3 per unit of risk. If you would invest 358.00 in Euroapi SAS on August 30, 2024 and sell it today you would earn a total of 32.00 from holding Euroapi SAS or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Euroapi SAS vs. Sanofi SA
Performance |
| Timeline |
| Euroapi SAS |
| Sanofi SA |
Euroapi SAS and Sanofi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euroapi SAS and Sanofi SA
The main advantage of trading using opposite Euroapi SAS and Sanofi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euroapi SAS position performs unexpectedly, Sanofi SA 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 SA will offset losses from the drop in Sanofi SA's long position.| Euroapi SAS vs. Sanofi SA | Euroapi SAS vs. TotalEnergies SE | Euroapi SAS vs. Stellantis NV | Euroapi SAS vs. Gaztransport Technigaz SAS |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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