Correlation Between Al Baraka and Credit Agricole

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

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

Diversification Opportunities for Al Baraka and Credit Agricole

0.61

Correlation Coefficient

Al Baraka  Credit Agricole

Poor diversification

The 3 months correlation between SAUD and Credit is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Al Baraka Bank and Credit Agricole Egypt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole Egypt and Al Baraka 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 Al Baraka Bank are associated (or correlated) with Credit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credit Agricole Egypt has no effect on the direction of Al Baraka i.e., Al Baraka and Credit Agricole go up and down completely randomly.

Pair Corralation between Al Baraka and Credit Agricole

Assuming the 90 days trading horizon Al Baraka Bank is expected to generate 1.13 times more return on investment than Credit Agricole. However, Al Baraka is 1.13 times more volatile than Credit Agricole Egypt. It trades about 0.19 of its potential returns per unit of risk. Credit Agricole Egypt is currently generating about 0.07 per unit of risk. If you would invest  1,111  in Al Baraka Bank on September 18, 2024 and sell it today you would earn a total of  239.00  from holding Al Baraka Bank or generate 21.51% return on investment over 90 days.

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

Al Baraka Bank  vs.  Credit Agricole Egypt

Al Baraka Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Al Baraka Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Al Baraka reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Al Baraka and Credit Agricole

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

The idea behind Al Baraka Bank and Credit Agricole Egypt 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 Global Correlations module to find global opportunities by holding instruments from different markets.