Correlation Between Soditech and Credit Agricole

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

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

Diversification Opportunities for Soditech and Credit Agricole

0.13

Correlation Coefficient

Soditech  Credit Agricole

Average diversification

The 3 months correlation between Soditech and Credit is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Soditech SA and Credit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole SA and Soditech 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 Soditech SA 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 SA has no effect on the direction of Soditech i.e., Soditech and Credit Agricole go up and down completely randomly.

Pair Corralation between Soditech and Credit Agricole

Assuming the 90 days trading horizon Soditech SA is expected to under-perform the Credit Agricole. But the stock apears to be less risky and, when comparing its historical volatility, Soditech SA is 2.87 times less risky than Credit Agricole. The stock trades about -0.29 of its potential returns per unit of risk. The Credit Agricole SA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,329  in Credit Agricole SA on September 12, 2024 and sell it today you would lose (10.00) from holding Credit Agricole SA or give up 0.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Soditech SA  vs.  Credit Agricole SA

Soditech SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soditech SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Soditech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Soditech and Credit Agricole

The main advantage of trading using opposite Soditech and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soditech 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 Soditech SA and Credit Agricole SA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.