Correlation Between Orange SA and Globalstar
Can any of the company-specific risk be diversified away by investing in both Orange SA and Globalstar 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 Globalstar 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 Globalstar, you can compare the effects of market volatilities on Orange SA and Globalstar 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 Globalstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Globalstar.
Diversification Opportunities for Orange SA and Globalstar
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Orange and Globalstar is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA ADR and Globalstar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalstar 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 Globalstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalstar has no effect on the direction of Orange SA i.e., Orange SA and Globalstar go up and down completely randomly.
Pair Corralation between Orange SA and Globalstar
Given the investment horizon of 90 days Orange SA ADR is expected to under-perform the Globalstar. But the stock apears to be less risky and, when comparing its historical volatility, Orange SA ADR is 9.35 times less risky than Globalstar. The stock trades about -0.14 of its potential returns per unit of risk. The Globalstar is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 106.00 in Globalstar on August 24, 2024 and sell it today you would earn a total of 71.00 from holding Globalstar or generate 66.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange SA ADR vs. Globalstar
Performance |
| Timeline |
| Orange SA ADR |
| Globalstar |
Orange SA and Globalstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange SA and Globalstar
The main advantage of trading using opposite Orange SA and Globalstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA position performs unexpectedly, Globalstar 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 Globalstar will offset losses from the drop in Globalstar's 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 |
| Globalstar vs. Iridium Communications | Globalstar vs. Lumen Technologies | Globalstar vs. InterDigital | Globalstar vs. Cogent Communications Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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