Correlation Between Orange SA and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Orange SA and Charter Communications 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 Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange SA ADR and Charter Communications, you can compare the effects of market volatilities on Orange SA and Charter Communications 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 Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Charter Communications.
Diversification Opportunities for Orange SA and Charter Communications
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Orange and Charter is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA ADR and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 ADR are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Orange SA i.e., Orange SA and Charter Communications go up and down completely randomly.
Pair Corralation between Orange SA and Charter Communications
Given the investment horizon of 90 days Orange SA ADR is expected to under-perform the Charter Communications. But the stock apears to be less risky and, when comparing its historical volatility, Orange SA ADR is 2.38 times less risky than Charter Communications. The stock trades about -0.03 of its potential returns per unit of risk. The Charter Communications is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 40,013 in Charter Communications on August 26, 2024 and sell it today you would lose (1,186) from holding Charter Communications or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange SA ADR vs. Charter Communications
Performance |
| Timeline |
| Orange SA ADR |
| Charter Communications |
Orange SA and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange SA and Charter Communications
The main advantage of trading using opposite Orange SA and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Orange SA vs. Telefonica Brasil SA | Orange SA vs. Vodafone Group PLC | Orange SA vs. Grupo Televisa SAB | Orange SA vs. America Movil SAB |
| Charter Communications vs. T Mobile | Charter Communications vs. Verizon Communications | Charter Communications vs. ATT Inc | Charter Communications vs. Liberty Broadband Srs |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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