Correlation Between Orange SA and Delfingen

Can any of the company-specific risk be diversified away by investing in both Orange SA and Delfingen 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 Delfingen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Orange SA and Delfingen, you can compare the effects of market volatilities on Orange SA and Delfingen 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 Delfingen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Delfingen.

Diversification Opportunities for Orange SA and Delfingen

0.77

Correlation Coefficient

Orange SA  Delfingen

Poor diversification

The 3 months correlation between Orange and Delfingen is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA and Delfingen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delfingen 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 are associated (or correlated) with Delfingen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delfingen has no effect on the direction of Orange SA i.e., Orange SA and Delfingen go up and down completely randomly.

Pair Corralation between Orange SA and Delfingen

Assuming the 90 days trading horizon Orange SA is expected to generate 0.38 times more return on investment than Delfingen. However, Orange SA is 2.64 times less risky than Delfingen. It trades about -0.05 of its potential returns per unit of risk. Delfingen is currently generating about -0.51 per unit of risk. If you would invest  1,047  in Orange SA on September 2, 2024 and sell it today you would lose (38.00) from holding Orange SA or give up 3.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Orange SA  vs.  Delfingen

Orange SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orange SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Orange SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Delfingen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Delfingen has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Orange SA and Delfingen

The main advantage of trading using opposite Orange SA and Delfingen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange SA position performs unexpectedly, Delfingen 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 Delfingen will offset losses from the drop in Delfingen's long position.

The idea behind Orange SA and Delfingen 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.