Correlation Between AXA SA and Orange SA
Can any of the company-specific risk be diversified away by investing in both AXA SA 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 AXA SA and Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXA SA and Orange SA, you can compare the effects of market volatilities on AXA SA 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 AXA SA with a short position of Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Orange SA.
Diversification Opportunities for AXA SA and Orange SA
Poor diversification
The 3 months correlation between AXA and Orange is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA and AXA 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 AXA SA 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 AXA SA i.e., AXA SA and Orange SA go up and down completely randomly.
Pair Corralation between AXA SA and Orange SA
Assuming the 90 days horizon AXA SA is expected to under-perform the Orange SA. But the stock apears to be less risky and, when comparing its historical volatility, AXA SA is 1.05 times less risky than Orange SA. The stock trades about -0.18 of its potential returns per unit of risk. The Orange SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,005 in Orange SA on August 28, 2024 and sell it today you would earn a total of 6.00 from holding Orange SA or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXA SA vs. Orange SA
Performance |
| Timeline |
| AXA SA |
| Orange SA |
AXA SA and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXA SA and Orange SA
The main advantage of trading using opposite AXA SA and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA SA 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.| AXA SA vs. BNP Paribas SA | AXA SA vs. Sanofi SA | AXA SA vs. Credit Agricole SA | AXA SA vs. Societe Generale SA |
| Orange SA vs. Infotel SA | Orange SA vs. IT Link | Orange SA vs. Bourse Direct SA | Orange SA vs. Aubay Socit Anonyme |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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