Correlation Between Credit Agricole and Diagnostic Medical

Can any of the company-specific risk be diversified away by investing in both Credit Agricole and Diagnostic Medical 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 Diagnostic Medical 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 Diagnostic Medical Systems, you can compare the effects of market volatilities on Credit Agricole and Diagnostic Medical 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 Diagnostic Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Agricole and Diagnostic Medical.

Diversification Opportunities for Credit Agricole and Diagnostic Medical

0.5

Correlation Coefficient

Credit Agricole  Diagnostic Medical

Very weak diversification

The 3 months correlation between Credit and Diagnostic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole SA and Diagnostic Medical Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diagnostic Medical 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 Diagnostic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diagnostic Medical has no effect on the direction of Credit Agricole i.e., Credit Agricole and Diagnostic Medical go up and down completely randomly.

Pair Corralation between Credit Agricole and Diagnostic Medical

Assuming the 90 days trading horizon Credit Agricole is expected to generate 1.03 times less return on investment than Diagnostic Medical. But when comparing it to its historical volatility, Credit Agricole SA is 5.3 times less risky than Diagnostic Medical. It trades about 0.1 of its potential returns per unit of risk. Diagnostic Medical Systems is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  75.00  in Diagnostic Medical Systems on September 27, 2024 and sell it today you would earn a total of  0.00  from holding Diagnostic Medical Systems or generate 0.0% return on investment over 90 days.

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

Credit Agricole SA  vs.  Diagnostic Medical Systems

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.

Diagnostic Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diagnostic Medical Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Credit Agricole and Diagnostic Medical

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

The idea behind Credit Agricole SA and Diagnostic Medical Systems 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.