Correlation Between Science Applications and Orange SA
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Orange SA, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Orange SA.
Diversification Opportunities for Science Applications and Orange SA
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Science and Orange is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Orange SA go up and down completely randomly.
Pair Corralation between Science Applications and Orange SA
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Orange SA. In addition to that, Science Applications is 2.22 times more volatile than Orange SA. It trades about -0.22 of its total potential returns per unit of risk. Orange SA is currently generating about 0.53 per unit of volatility. If you would invest 1,032 in Orange SA on November 28, 2024 and sell it today you would earn a total of 103.00 from holding Orange SA or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Orange SA
Performance |
| Timeline |
| Science Applications |
| Orange SA |
Science Applications and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Orange SA
The main advantage of trading using opposite Science Applications and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
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Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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