Correlation Between Vodacom Group and Orange SA
Can any of the company-specific risk be diversified away by investing in both Vodacom Group 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 Vodacom Group and Orange SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vodacom Group Ltd and Orange SA ADR, you can compare the effects of market volatilities on Vodacom Group 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 Vodacom Group with a short position of Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vodacom Group and Orange SA.
Diversification Opportunities for Vodacom Group and Orange SA
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vodacom and Orange is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vodacom Group Ltd 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 Vodacom Group 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 Vodacom Group Ltd 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 Vodacom Group i.e., Vodacom Group and Orange SA go up and down completely randomly.
Pair Corralation between Vodacom Group and Orange SA
Assuming the 90 days horizon Vodacom Group Ltd is expected to under-perform the Orange SA. In addition to that, Vodacom Group is 2.3 times more volatile than Orange SA ADR. It trades about -0.2 of its total potential returns per unit of risk. Orange SA ADR is currently generating about -0.08 per unit of volatility. If you would invest 1,088 in Orange SA ADR on September 1, 2024 and sell it today you would lose (20.00) from holding Orange SA ADR or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vodacom Group Ltd vs. Orange SA ADR
Performance |
| Timeline |
| Vodacom Group |
| Orange SA ADR |
Vodacom Group and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vodacom Group and Orange SA
The main advantage of trading using opposite Vodacom Group and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vodacom Group 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.| Vodacom Group vs. XL Axiata Tbk | Vodacom Group vs. Telenor ASA ADR | Vodacom Group vs. Tele2 AB | Vodacom Group vs. MTN Group Ltd |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation |