Correlation Between Adyen NV and CREDIT AGRICOLE

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

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

Diversification Opportunities for Adyen NV and CREDIT AGRICOLE

0.2

Correlation Coefficient

Adyen NV  CREDIT AGRICOLE

Modest diversification

The 3 months correlation between Adyen and CREDIT is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Adyen NV and CREDIT AGRICOLE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREDIT AGRICOLE and Adyen NV 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 Adyen NV 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 has no effect on the direction of Adyen NV i.e., Adyen NV and CREDIT AGRICOLE go up and down completely randomly.

Pair Corralation between Adyen NV and CREDIT AGRICOLE

Assuming the 90 days horizon Adyen NV is expected to generate 1.44 times less return on investment than CREDIT AGRICOLE. In addition to that, Adyen NV is 2.71 times more volatile than CREDIT AGRICOLE. It trades about 0.02 of its total potential returns per unit of risk. CREDIT AGRICOLE is currently generating about 0.07 per unit of volatility. If you would invest  895.00  in CREDIT AGRICOLE on October 4, 2024 and sell it today you would earn a total of  438.00  from holding CREDIT AGRICOLE or generate 48.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.8%
Values	Daily Returns

Adyen NV  vs.  CREDIT AGRICOLE

Adyen NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

CREDIT AGRICOLE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CREDIT AGRICOLE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CREDIT AGRICOLE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Adyen NV and CREDIT AGRICOLE

The main advantage of trading using opposite Adyen NV and CREDIT AGRICOLE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adyen NV 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 Adyen NV and CREDIT AGRICOLE 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.