Correlation Between Orange SA and Rogers Communications
Can any of the company-specific risk be diversified away by investing in both Orange SA and Rogers 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 Rogers 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 Rogers Communications, you can compare the effects of market volatilities on Orange SA and Rogers 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 Rogers Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Rogers Communications.
Diversification Opportunities for Orange SA and Rogers Communications
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Orange and Rogers is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA ADR and Rogers Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rogers 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 Rogers Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rogers Communications has no effect on the direction of Orange SA i.e., Orange SA and Rogers Communications go up and down completely randomly.
Pair Corralation between Orange SA and Rogers Communications
Given the investment horizon of 90 days Orange SA ADR is expected to generate 0.83 times more return on investment than Rogers Communications. However, Orange SA ADR is 1.2 times less risky than Rogers Communications. It trades about 0.04 of its potential returns per unit of risk. Rogers Communications is currently generating about -0.03 per unit of risk. If you would invest 888.00 in Orange SA ADR on August 23, 2024 and sell it today you would earn a total of 158.00 from holding Orange SA ADR or generate 17.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange SA ADR vs. Rogers Communications
Performance |
| Timeline |
| Orange SA ADR |
| Rogers Communications |
Orange SA and Rogers Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange SA and Rogers Communications
The main advantage of trading using opposite Orange SA and Rogers Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA position performs unexpectedly, Rogers 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 Rogers Communications will offset losses from the drop in Rogers 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 |
| Rogers Communications vs. BCE Inc | Rogers Communications vs. Orange SA ADR | Rogers Communications vs. America Movil SAB | Rogers Communications vs. Telus Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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