Correlation Between Orange SA and Shaw Communications

Can any of the company-specific risk be diversified away by investing in both Orange SA and Shaw 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 Shaw 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 Shaw Communications Class, you can compare the effects of market volatilities on Orange SA and Shaw 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 Shaw Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange SA and Shaw Communications.

Diversification Opportunities for Orange SA and Shaw Communications

-0.1

Correlation Coefficient

Orange SA  Shaw Communications

Good diversification

The 3 months correlation between Orange and Shaw is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Orange SA ADR and Shaw Communications Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaw Communications Class 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 Shaw Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaw Communications Class has no effect on the direction of Orange SA i.e., Orange SA and Shaw Communications go up and down completely randomly.

Pair Corralation between Orange SA and Shaw Communications

If you would invest  3,018  in Shaw Communications Class on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Shaw Communications Class or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

Orange SA ADR  vs.  Shaw Communications Class

Orange SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Orange SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Shaw Communications Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shaw Communications Class has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking indicators, Shaw Communications is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Orange SA and Shaw Communications

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

The idea behind Orange SA ADR and Shaw Communications Class 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.