Correlation Between SimilarWeb and Orange SA

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

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

Diversification Opportunities for SimilarWeb and Orange SA

-0.64

Correlation Coefficient

SimilarWeb  Orange SA

Excellent diversification

The 3 months correlation between SimilarWeb and Orange is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding SimilarWeb and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA and SimilarWeb 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 SimilarWeb 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 SimilarWeb i.e., SimilarWeb and Orange SA go up and down completely randomly.

Pair Corralation between SimilarWeb and Orange SA

Given the investment horizon of 90 days SimilarWeb is expected to under-perform the Orange SA. In addition to that, SimilarWeb is 2.02 times more volatile than Orange SA. It trades about -0.14 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 21, 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	Weak
Accuracy	90.0%
Values	Daily Returns

SimilarWeb  vs.  Orange SA

SimilarWeb

Risk-Adjusted Performance

Very Weak

Over the last 90 days SimilarWeb 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company 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 SimilarWeb and Orange SA

The main advantage of trading using opposite SimilarWeb and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SimilarWeb 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 SimilarWeb 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.