Correlation Between Societe Generale and Orange SA
Can any of the company-specific risk be diversified away by investing in both Societe Generale 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 Societe Generale and Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Societe Generale SA and Orange SA, you can compare the effects of market volatilities on Societe Generale 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 Societe Generale with a short position of Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Societe Generale and Orange SA.
Diversification Opportunities for Societe Generale and Orange SA
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Societe and Orange is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Societe Generale SA and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA and Societe Generale 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 Societe Generale 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 Societe Generale i.e., Societe Generale and Orange SA go up and down completely randomly.
Pair Corralation between Societe Generale and Orange SA
Assuming the 90 days trading horizon Societe Generale SA is expected to generate 1.92 times more return on investment than Orange SA. However, Societe Generale is 1.92 times more volatile than Orange SA. It trades about 0.06 of its potential returns per unit of risk. Orange SA is currently generating about 0.0 per unit of risk. If you would invest 2,169 in Societe Generale SA on August 27, 2024 and sell it today you would earn a total of 426.00 from holding Societe Generale SA or generate 19.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Societe Generale SA vs. Orange SA
Performance |
| Timeline |
| Societe Generale |
| Orange SA |
Societe Generale and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Societe Generale and Orange SA
The main advantage of trading using opposite Societe Generale and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Societe Generale 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.| Societe Generale vs. BNP Paribas SA | Societe Generale vs. Credit Agricole SA | Societe Generale vs. AXA SA | Societe Generale vs. Renault SA |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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