Correlation Between Orange SA and Vinci SA
Can any of the company-specific risk be diversified away by investing in both Orange SA and Vinci 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 Orange SA and Vinci SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange SA and Vinci SA, you can compare the effects of market volatilities on Orange SA and Vinci 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 Orange SA with a short position of Vinci SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Vinci SA.
Diversification Opportunities for Orange SA and Vinci SA
Poor diversification
The 3 months correlation between Orange and Vinci is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA and Vinci SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA 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 Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA has no effect on the direction of Orange SA i.e., Orange SA and Vinci SA go up and down completely randomly.
Pair Corralation between Orange SA and Vinci SA
Assuming the 90 days trading horizon Orange SA is expected to generate 0.72 times more return on investment than Vinci SA. However, Orange SA is 1.4 times less risky than Vinci SA. It trades about 0.53 of its potential returns per unit of risk. Vinci SA is currently generating about 0.24 per unit of risk. If you would invest 962.00 in Orange SA on November 5, 2024 and sell it today you would earn a total of 76.00 from holding Orange SA or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Orange SA vs. Vinci SA
Performance |
| Timeline |
| Orange SA |
| Vinci SA |
Orange SA and Vinci SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange SA and Vinci SA
The main advantage of trading using opposite Orange SA and Vinci SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA position performs unexpectedly, Vinci 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 Vinci SA will offset losses from the drop in Vinci SA's long position.The idea behind Orange SA and Vinci 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.| Vinci SA vs. Air Liquide SA | Vinci SA vs. Bouygues SA | Vinci SA vs. AXA SA | Vinci SA vs. Compagnie de Saint Gobain |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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