Correlation Between Getlink SE and Orange SA

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

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

Diversification Opportunities for Getlink SE and Orange SA

0.65

Correlation Coefficient

Getlink SE  Orange SA

Poor diversification

The 3 months correlation between Getlink and Orange is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Getlink SE and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA and Getlink SE 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 Getlink SE 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 Getlink SE i.e., Getlink SE and Orange SA go up and down completely randomly.

Pair Corralation between Getlink SE and Orange SA

Assuming the 90 days trading horizon Getlink SE is expected to generate 3.68 times less return on investment than Orange SA. In addition to that, Getlink SE is 1.21 times more volatile than Orange SA. It trades about 0.1 of its total potential returns per unit of risk. Orange SA is currently generating about 0.43 per unit of volatility. If you would invest  963.00  in Orange SA on December 30, 2024 and sell it today you would earn a total of  222.00  from holding Orange SA or generate 23.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Getlink SE  vs.  Orange SA

Getlink SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Getlink SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Getlink SE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Orange SA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Orange SA are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orange SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Getlink SE and Orange SA

The main advantage of trading using opposite Getlink SE and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getlink SE 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 Getlink SE 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.