Correlation Between Rogers Communications and Orange SA

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

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

Diversification Opportunities for Rogers Communications and Orange SA

0.91

Correlation Coefficient

Rogers Communications  Orange SA

Almost no diversification

The 3 months correlation between Rogers and Orange is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Rogers Communications 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 Rogers Communications 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 Rogers Communications 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 Rogers Communications i.e., Rogers Communications and Orange SA go up and down completely randomly.

Pair Corralation between Rogers Communications and Orange SA

Considering the 90-day investment horizon Rogers Communications is expected to under-perform the Orange SA. But the stock apears to be less risky and, when comparing its historical volatility, Rogers Communications is 1.0 times less risky than Orange SA. The stock trades about -0.17 of its potential returns per unit of risk. The Orange SA ADR is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,168  in Orange SA ADR on August 31, 2024 and sell it today you would lose (100.00) from holding Orange SA ADR or give up 8.56% of portfolio value over 90 days.

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

Rogers Communications  vs.  Orange SA ADR

Rogers Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rogers Communications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest sluggish performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

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 abnormal 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.

Pair Trading with Rogers Communications and Orange SA

The main advantage of trading using opposite Rogers Communications and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rogers Communications 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 Rogers Communications 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.