Correlation Between Sanofi SA and Fleury Michon
Can any of the company-specific risk be diversified away by investing in both Sanofi SA and Fleury Michon 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 Fleury Michon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanofi SA and Fleury Michon, you can compare the effects of market volatilities on Sanofi SA and Fleury Michon 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 Fleury Michon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sanofi SA and Fleury Michon.
Diversification Opportunities for Sanofi SA and Fleury Michon
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sanofi and Fleury is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Sanofi SA and Fleury Michon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fleury Michon 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 Fleury Michon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fleury Michon has no effect on the direction of Sanofi SA i.e., Sanofi SA and Fleury Michon go up and down completely randomly.
Pair Corralation between Sanofi SA and Fleury Michon
Assuming the 90 days trading horizon Sanofi SA is expected to under-perform the Fleury Michon. But the stock apears to be less risky and, when comparing its historical volatility, Sanofi SA is 1.02 times less risky than Fleury Michon. The stock trades about -0.31 of its potential returns per unit of risk. The Fleury Michon is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,390 in Fleury Michon on August 30, 2024 and sell it today you would earn a total of 110.00 from holding Fleury Michon or generate 4.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanofi SA vs. Fleury Michon
Performance |
| Timeline |
| Sanofi SA |
| Fleury Michon |
Sanofi SA and Fleury Michon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sanofi SA and Fleury Michon
The main advantage of trading using opposite Sanofi SA and Fleury Michon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanofi SA position performs unexpectedly, Fleury Michon 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 Fleury Michon will offset losses from the drop in Fleury Michon's long position.The idea behind Sanofi SA and Fleury Michon 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.| Fleury Michon vs. Stef SA | Fleury Michon vs. Bonduelle SCA | Fleury Michon vs. VIEL Cie socit | Fleury Michon vs. Groupe Guillin SA |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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