Correlation Between Thomas Scott and SANOFI S

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

Diversification Opportunities for Thomas Scott and SANOFI S

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Thomas and SANOFI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Thomas Scott 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 Thomas Scott 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 Thomas Scott 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 Thomas Scott i.e., Thomas Scott and SANOFI S go up and down completely randomly.

Pair Corralation between Thomas Scott and SANOFI S

Assuming the 90 days trading horizon Thomas Scott Limited is expected to generate 6.68 times more return on investment than SANOFI S. However, Thomas Scott is 6.68 times more volatile than SANOFI S HEALTHC. It trades about 0.64 of its potential returns per unit of risk. SANOFI S HEALTHC is currently generating about 0.14 per unit of risk. If you would invest  20,916  in Thomas Scott Limited on September 14, 2024 and sell it today you would earn a total of  13,104  from holding Thomas Scott Limited or generate 62.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

Thomas Scott Limited  vs.  SANOFI S HEALTHC

 Performance 
       Timeline  
Thomas Scott Limited 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Thomas Scott Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Thomas Scott exhibited 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 newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Thomas Scott and SANOFI S Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thomas Scott and SANOFI S

The main advantage of trading using opposite Thomas Scott and SANOFI S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thomas Scott 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 Thomas Scott 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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