Correlation Between Orange SA and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Orange SA and Telenor ASA 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 Telenor ASA 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 Telenor ASA, you can compare the effects of market volatilities on Orange SA and Telenor ASA 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Telenor ASA.
Diversification Opportunities for Orange SA and Telenor ASA
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orange and Telenor is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA ADR and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of Orange SA i.e., Orange SA and Telenor ASA go up and down completely randomly.
Pair Corralation between Orange SA and Telenor ASA
Given the investment horizon of 90 days Orange SA ADR is expected to under-perform the Telenor ASA. But the stock apears to be less risky and, when comparing its historical volatility, Orange SA ADR is 1.82 times less risky than Telenor ASA. The stock trades about -0.03 of its potential returns per unit of risk. The Telenor ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,128 in Telenor ASA on August 28, 2024 and sell it today you would earn a total of 38.00 from holding Telenor ASA or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange SA ADR vs. Telenor ASA
Performance |
| Timeline |
| Orange SA ADR |
| Telenor ASA |
Orange SA and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange SA and Telenor ASA
The main advantage of trading using opposite Orange SA and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA position performs unexpectedly, Telenor ASA 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| Orange SA vs. Liberty Broadband Srs | Orange SA vs. Ribbon Communications | Orange SA vs. Liberty Broadband Srs | Orange SA vs. Shenandoah Telecommunications Co |
| Telenor ASA vs. Orange SA ADR | Telenor ASA vs. ATT Inc | Telenor ASA vs. Verizon Communications | Telenor ASA vs. MTN Group Ltd |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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