Correlation Between Santen Pharmaceutical and Sanofi

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

Diversification Opportunities for Santen Pharmaceutical and Sanofi

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Santen and Sanofi is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Santen Pharmaceutical Co and Sanofi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanofi and Santen Pharmaceutical 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 Santen Pharmaceutical Co are associated (or correlated) with Sanofi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanofi has no effect on the direction of Santen Pharmaceutical i.e., Santen Pharmaceutical and Sanofi go up and down completely randomly.

Pair Corralation between Santen Pharmaceutical and Sanofi

Assuming the 90 days horizon Santen Pharmaceutical Co is expected to generate 0.74 times more return on investment than Sanofi. However, Santen Pharmaceutical Co is 1.34 times less risky than Sanofi. It trades about 0.02 of its potential returns per unit of risk. Sanofi is currently generating about 0.01 per unit of risk. If you would invest  927.00  in Santen Pharmaceutical Co on December 30, 2023 and sell it today you would earn a total of  48.00  from holding Santen Pharmaceutical Co or generate 5.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy98.99%
ValuesDaily Returns

Santen Pharmaceutical Co  vs.  Sanofi

 Performance 
       Timeline  
Santen Pharmaceutical 

Risk-Adjusted Performance

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Over the last 90 days Santen Pharmaceutical Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Santen Pharmaceutical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Sanofi 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Sanofi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sanofi is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Santen Pharmaceutical and Sanofi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Santen Pharmaceutical and Sanofi

The main advantage of trading using opposite Santen Pharmaceutical and Sanofi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santen Pharmaceutical position performs unexpectedly, Sanofi 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 will offset losses from the drop in Sanofi's long position.
The idea behind Santen Pharmaceutical Co and Sanofi 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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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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