Correlation Between Credit Agricole and Act Financial

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

By analyzing existing cross correlation between Credit Agricole Egypt and Act Financial, you can compare the effects of market volatilities on Credit Agricole and Act Financial 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 Credit Agricole with a short position of Act Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Agricole and Act Financial.

Diversification Opportunities for Credit Agricole and Act Financial

0.59

Correlation Coefficient

Credit Agricole  Act Financial

Very weak diversification

The 3 months correlation between Credit and Act is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole Egypt and Act Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Act Financial and Credit Agricole 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 Credit Agricole Egypt are associated (or correlated) with Act Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Act Financial has no effect on the direction of Credit Agricole i.e., Credit Agricole and Act Financial go up and down completely randomly.

Pair Corralation between Credit Agricole and Act Financial

Assuming the 90 days trading horizon Credit Agricole Egypt is expected to generate 0.66 times more return on investment than Act Financial. However, Credit Agricole Egypt is 1.52 times less risky than Act Financial. It trades about 0.02 of its potential returns per unit of risk. Act Financial is currently generating about -0.04 per unit of risk. If you would invest  2,049  in Credit Agricole Egypt on September 18, 2024 and sell it today you would earn a total of  38.00  from holding Credit Agricole Egypt or generate 1.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	61.24%
Values	Daily Returns

Credit Agricole Egypt  vs.  Act Financial

Credit Agricole Egypt

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole Egypt are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Credit Agricole may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Act Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Act Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Act Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Credit Agricole and Act Financial

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

The idea behind Credit Agricole Egypt and Act Financial 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.