Correlation Between Orange SA and ATT
Can any of the company-specific risk be diversified away by investing in both Orange SA and ATT 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 ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange SA and ATT Inc, you can compare the effects of market volatilities on Orange SA and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and ATT.
Diversification Opportunities for Orange SA and ATT
Excellent diversification
The 3 months correlation between Orange and ATT is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Orange SA i.e., Orange SA and ATT go up and down completely randomly.
Pair Corralation between Orange SA and ATT
Assuming the 90 days horizon Orange SA is expected to generate 1.87 times less return on investment than ATT. But when comparing it to its historical volatility, Orange SA is 1.42 times less risky than ATT. It trades about 0.04 of its potential returns per unit of risk. ATT Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,583 in ATT Inc on August 30, 2024 and sell it today you would earn a total of 617.00 from holding ATT Inc or generate 38.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange SA vs. ATT Inc
Performance |
| Timeline |
| Orange SA |
| ATT Inc |
Orange SA and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange SA and ATT
The main advantage of trading using opposite Orange SA and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Orange SA vs. Stewart Information Services | Orange SA vs. Chesapeake Utilities | Orange SA vs. Science Applications International | Orange SA vs. MICRONIC MYDATA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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