Correlation Between Orange SA and Media 6

Can any of the company-specific risk be diversified away by investing in both Orange SA and Media 6 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 Orange SA and Media 6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orange SA and Media 6 SA, you can compare the effects of market volatilities on Orange SA and Media 6 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 Orange SA with a short position of Media 6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Media 6.

Diversification Opportunities for Orange SA and Media 6

-0.18

Correlation Coefficient

Orange SA  Media 6

Good diversification

The 3 months correlation between Orange and Media is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA and Media 6 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media 6 SA and Orange SA 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 Orange SA are associated (or correlated) with Media 6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media 6 SA has no effect on the direction of Orange SA i.e., Orange SA and Media 6 go up and down completely randomly.

Pair Corralation between Orange SA and Media 6

Assuming the 90 days trading horizon Orange SA is expected to generate 0.22 times more return on investment than Media 6. However, Orange SA is 4.59 times less risky than Media 6. It trades about 0.43 of its potential returns per unit of risk. Media 6 SA is currently generating about 0.0 per unit of risk. If you would invest  963.00  in Orange SA on December 29, 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Orange SA  vs.  Media 6 SA

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 34 (%) 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.

Media 6 SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Media 6 SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Media 6 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Orange SA and Media 6

The main advantage of trading using opposite Orange SA and Media 6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA position performs unexpectedly, Media 6 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 Media 6 will offset losses from the drop in Media 6's long position.

The idea behind Orange SA and Media 6 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.