Correlation Between America Movil and Orange SA

Can any of the company-specific risk be diversified away by investing in both America Movil and Orange SA 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 America Movil and Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between America Movil SAB and Orange SA, you can compare the effects of market volatilities on America Movil and Orange SA 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 America Movil with a short position of Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of America Movil and Orange SA.

Diversification Opportunities for America Movil and Orange SA

0.21

Correlation Coefficient

America Movil  Orange SA

Modest diversification

The 3 months correlation between America and Orange is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding America Movil SAB and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA and America Movil 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 America Movil SAB are associated (or correlated) with Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA has no effect on the direction of America Movil i.e., America Movil and Orange SA go up and down completely randomly.

Pair Corralation between America Movil and Orange SA

Considering the 90-day investment horizon America Movil is expected to generate 19.15 times less return on investment than Orange SA. But when comparing it to its historical volatility, America Movil SAB is 1.58 times less risky than Orange SA. It trades about 0.02 of its potential returns per unit of risk. Orange SA is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  955.00  in Orange SA on December 21, 2024 and sell it today you would earn a total of  275.00  from holding Orange SA or generate 28.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.53%
Values	Daily Returns

America Movil SAB  vs.  Orange SA

America Movil SAB

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in America Movil SAB are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, America Movil is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Orange SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orange SA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Orange SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with America Movil and Orange SA

The main advantage of trading using opposite America Movil and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if America Movil position performs unexpectedly, Orange SA 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 Orange SA will offset losses from the drop in Orange SA's long position.

The idea behind America Movil SAB and Orange SA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.