Correlation Between U S Cellular and Orange SA

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

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

Diversification Opportunities for U S Cellular and Orange SA

-0.76

Correlation Coefficient

U S Cellular  Orange SA

Pay attention - limited upside

The 3 months correlation between USM and Orange is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding United States Cellular 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 U S Cellular 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 United States Cellular 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 U S Cellular i.e., U S Cellular and Orange SA go up and down completely randomly.

Pair Corralation between U S Cellular and Orange SA

Considering the 90-day investment horizon United States Cellular is expected to generate 5.33 times more return on investment than Orange SA. However, U S Cellular is 5.33 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  2,288  in United States Cellular on August 31, 2024 and sell it today you would earn a total of  4,058  from holding United States Cellular or generate 177.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

United States Cellular  vs.  Orange SA ADR

United States Cellular

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in United States Cellular are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish basic indicators, U S Cellular may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 U S Cellular and Orange SA

The main advantage of trading using opposite U S Cellular and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U S Cellular 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 United States Cellular 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.