Correlation Between Orange SA and Societe De

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

By analyzing existing cross correlation between Orange SA and Societe de la, you can compare the effects of market volatilities on Orange SA and Societe De 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 Societe De. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Societe De.

Diversification Opportunities for Orange SA and Societe De

0.57

Correlation Coefficient

Orange SA  Societe De

Very weak diversification

The 3 months correlation between Orange and Societe is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA and Societe de la in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Societe de la 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 Societe De. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Societe de la has no effect on the direction of Orange SA i.e., Orange SA and Societe De go up and down completely randomly.

Pair Corralation between Orange SA and Societe De

Assuming the 90 days trading horizon Orange SA is expected to generate 1.31 times less return on investment than Societe De. But when comparing it to its historical volatility, Orange SA is 2.56 times less risky than Societe De. It trades about 0.31 of its potential returns per unit of risk. Societe de la is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  410.00  in Societe de la on December 2, 2024 and sell it today you would earn a total of  98.00  from holding Societe de la or generate 23.9% return on investment over 90 days.

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

Orange SA  vs.  Societe de la

Orange SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Orange SA are ranked lower than 24 (%) 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.

Societe de la

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Societe de la are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Societe De sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orange SA and Societe De

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

The idea behind Orange SA and Societe de la 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.