Correlation Between Otsuka Holdings and Sanofi ADR
Can any of the company-specific risk be diversified away by investing in both Otsuka Holdings and Sanofi ADR 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 Otsuka Holdings and Sanofi ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Otsuka Holdings Co and Sanofi ADR, you can compare the effects of market volatilities on Otsuka Holdings and Sanofi ADR 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 Otsuka Holdings with a short position of Sanofi ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Otsuka Holdings and Sanofi ADR.
Diversification Opportunities for Otsuka Holdings and Sanofi ADR
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Otsuka and Sanofi is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Otsuka Holdings Co and Sanofi ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi ADR and Otsuka Holdings 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 Otsuka Holdings Co are associated (or correlated) with Sanofi ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi ADR has no effect on the direction of Otsuka Holdings i.e., Otsuka Holdings and Sanofi ADR go up and down completely randomly.
Pair Corralation between Otsuka Holdings and Sanofi ADR
Assuming the 90 days horizon Otsuka Holdings Co is expected to generate 1.35 times more return on investment than Sanofi ADR. However, Otsuka Holdings is 1.35 times more volatile than Sanofi ADR. It trades about -0.1 of its potential returns per unit of risk. Sanofi ADR is currently generating about -0.47 per unit of risk. If you would invest 2,990 in Otsuka Holdings Co on August 27, 2024 and sell it today you would lose (107.00) from holding Otsuka Holdings Co or give up 3.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Otsuka Holdings Co vs. Sanofi ADR
Performance |
| Timeline |
| Otsuka Holdings |
| Sanofi ADR |
Otsuka Holdings and Sanofi ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Otsuka Holdings and Sanofi ADR
The main advantage of trading using opposite Otsuka Holdings and Sanofi ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Otsuka Holdings position performs unexpectedly, Sanofi ADR 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 ADR will offset losses from the drop in Sanofi ADR's long position.| Otsuka Holdings vs. Pfizer Inc | Otsuka Holdings vs. Astellas Pharma | Otsuka Holdings vs. Bristol Myers Squibb | Otsuka Holdings vs. Bayer AG |
| Sanofi ADR vs. AstraZeneca PLC ADR | Sanofi ADR vs. Roche Holding Ltd | Sanofi ADR vs. GlaxoSmithKline PLC ADR | Sanofi ADR vs. Merck Company |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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