Correlation Between Credit Agricole and KBC Groep

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

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

Diversification Opportunities for Credit Agricole and KBC Groep

0.44

Correlation Coefficient

Credit Agricole  KBC Groep

Very weak diversification

The 3 months correlation between Credit and KBC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole SA and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV 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 SA are associated (or correlated) with KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Credit Agricole i.e., Credit Agricole and KBC Groep go up and down completely randomly.

Pair Corralation between Credit Agricole and KBC Groep

Assuming the 90 days horizon Credit Agricole SA is expected to under-perform the KBC Groep. In addition to that, Credit Agricole is 1.11 times more volatile than KBC Groep NV. It trades about -0.17 of its total potential returns per unit of risk. KBC Groep NV is currently generating about -0.02 per unit of volatility. If you would invest  3,683  in KBC Groep NV on September 4, 2024 and sell it today you would lose (77.00) from holding KBC Groep NV or give up 2.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Credit Agricole SA  vs.  KBC Groep NV

Credit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KBC Groep NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBC Groep NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, KBC Groep is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Credit Agricole and KBC Groep

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

The idea behind Credit Agricole SA and KBC Groep NV 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 Stocks Directory module to find actively traded stocks across global markets.