Correlation Between Sanofi SA and Entreprendre
Can any of the company-specific risk be diversified away by investing in both Sanofi SA and Entreprendre 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 SA and Entreprendre into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanofi SA and Entreprendre, you can compare the effects of market volatilities on Sanofi SA and Entreprendre 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 SA with a short position of Entreprendre. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi SA and Entreprendre.
Diversification Opportunities for Sanofi SA and Entreprendre
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sanofi and Entreprendre is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi SA and Entreprendre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entreprendre and Sanofi SA 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 SA are associated (or correlated) with Entreprendre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entreprendre has no effect on the direction of Sanofi SA i.e., Sanofi SA and Entreprendre go up and down completely randomly.
Pair Corralation between Sanofi SA and Entreprendre
Assuming the 90 days trading horizon Sanofi SA is expected to generate 11.6 times less return on investment than Entreprendre. But when comparing it to its historical volatility, Sanofi SA is 1.85 times less risky than Entreprendre. It trades about 0.02 of its potential returns per unit of risk. Entreprendre is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 300.00 in Entreprendre on August 29, 2024 and sell it today you would earn a total of 144.00 from holding Entreprendre or generate 48.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Sanofi SA vs. Entreprendre
Performance |
| Timeline |
| Sanofi SA |
| Entreprendre |
Sanofi SA and Entreprendre Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanofi SA and Entreprendre
The main advantage of trading using opposite Sanofi SA and Entreprendre positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi SA position performs unexpectedly, Entreprendre 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 Entreprendre will offset losses from the drop in Entreprendre's long position.The idea behind Sanofi SA and Entreprendre 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.| Entreprendre vs. Entreparticuli | Entreprendre vs. Enertime SAS | Entreprendre vs. Oeneo SA | Entreprendre vs. Enogia 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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