Correlation Between Credit Agricole and Placoplatre

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

Diversification Opportunities for Credit Agricole and Placoplatre

0.27

Correlation Coefficient

Credit Agricole  Placoplatre

Modest diversification

The 3 months correlation between Credit and Placoplatre is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole SA and Placoplatre SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Placoplatre SA 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 Placoplatre. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Placoplatre SA has no effect on the direction of Credit Agricole i.e., Credit Agricole and Placoplatre go up and down completely randomly.

Pair Corralation between Credit Agricole and Placoplatre

Assuming the 90 days trading horizon Credit Agricole is expected to generate 1.02 times less return on investment than Placoplatre. But when comparing it to its historical volatility, Credit Agricole SA is 1.57 times less risky than Placoplatre. It trades about 0.03 of its potential returns per unit of risk. Placoplatre SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  48,153  in Placoplatre SA on October 7, 2024 and sell it today you would earn a total of  1,847  from holding Placoplatre SA or generate 3.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	67.06%
Values	Daily Returns

Credit Agricole SA  vs.  Placoplatre SA

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 somewhat strong basic indicators, Credit Agricole is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Placoplatre SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Placoplatre SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Placoplatre is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Credit Agricole and Placoplatre

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

The idea behind Credit Agricole SA and Placoplatre 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.