Correlation Between Sea and Orange SA
Can any of the company-specific risk be diversified away by investing in both Sea and Orange 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 Sea and Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea and Orange SA ADR, you can compare the effects of market volatilities on Sea and Orange 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 Sea with a short position of Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea and Orange SA.
Diversification Opportunities for Sea and Orange SA
Pay attention - limited upside
The 3 months correlation between Sea and Orange is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Orange SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange SA ADR and Sea 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 Sea are associated (or correlated) with Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA ADR has no effect on the direction of Sea i.e., Sea and Orange SA go up and down completely randomly.
Pair Corralation between Sea and Orange SA
Allowing for the 90-day total investment horizon Sea is expected to generate 3.38 times more return on investment than Orange SA. However, Sea is 3.38 times more volatile than Orange SA ADR. It trades about 0.06 of its potential returns per unit of risk. Orange SA ADR is currently generating about 0.03 per unit of risk. If you would invest 5,902 in Sea on August 24, 2024 and sell it today you would earn a total of 5,402 from holding Sea or generate 91.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Sea vs. Orange SA ADR
Performance |
| Timeline |
| Sea |
| Orange SA ADR |
Sea and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea and Orange SA
The main advantage of trading using opposite Sea and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea position performs unexpectedly, Orange 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 Orange SA will offset losses from the drop in Orange SA's long position.The idea behind Sea and Orange SA ADR 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.| Orange SA vs. Telefonica Brasil SA | Orange SA vs. Vodafone Group PLC | Orange SA vs. Grupo Televisa SAB | Orange SA vs. America Movil SAB |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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