Correlation Between Design Therapeutics and Orange SA

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

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

Diversification Opportunities for Design Therapeutics and Orange SA

-0.45

Correlation Coefficient

Design Therapeutics  Orange SA

Very good diversification

The 3 months correlation between Design and Orange is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA and Design Therapeutics 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 Design Therapeutics 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 Design Therapeutics i.e., Design Therapeutics and Orange SA go up and down completely randomly.

Pair Corralation between Design Therapeutics and Orange SA

Given the investment horizon of 90 days Design Therapeutics is expected to under-perform the Orange SA. In addition to that, Design Therapeutics is 2.38 times more volatile than Orange SA. It trades about -0.05 of its total potential returns per unit of risk. Orange SA is currently generating about 0.21 per unit of volatility. If you would invest  955.00  in Orange SA on December 20, 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 Against
Strength	Very Weak
Accuracy	89.83%
Values	Daily Returns

Design Therapeutics  vs.  Orange SA

Design Therapeutics

Risk-Adjusted Performance

Very Weak

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

The main advantage of trading using opposite Design Therapeutics and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design Therapeutics 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 Design Therapeutics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.