Correlation Between Aquagold International and Orange SA

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

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

Diversification Opportunities for Aquagold International and Orange SA

0.19

Correlation Coefficient

Aquagold International  Orange SA

Average diversification

The 3 months correlation between Aquagold and Orange is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Orange SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA ADR and Aquagold International 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 Aquagold International 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 ADR has no effect on the direction of Aquagold International i.e., Aquagold International and Orange SA go up and down completely randomly.

Pair Corralation between Aquagold International and Orange SA

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Orange SA. In addition to that, Aquagold International is 12.67 times more volatile than Orange SA ADR. It trades about -0.16 of its total potential returns per unit of risk. Orange SA ADR is currently generating about -0.17 per unit of volatility. If you would invest  1,054  in Orange SA ADR on September 26, 2024 and sell it today you would lose (81.00) from holding Orange SA ADR or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.12%
Values	Daily Returns

Aquagold International  vs.  Orange SA ADR

Aquagold International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Orange SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orange SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Aquagold International and Orange SA

The main advantage of trading using opposite Aquagold International and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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 Aquagold International and Orange SA ADR 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.