Correlation Between Carrefour and Credit Agricole

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

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

Diversification Opportunities for Carrefour and Credit Agricole

-0.65

Correlation Coefficient

Carrefour  Credit Agricole

Excellent diversification

The 3 months correlation between Carrefour and Credit is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour 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 Carrefour 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 Carrefour 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 Carrefour i.e., Carrefour and Credit Agricole go up and down completely randomly.

Pair Corralation between Carrefour and Credit Agricole

Assuming the 90 days horizon Carrefour SA is expected to under-perform the Credit Agricole. In addition to that, Carrefour is 1.79 times more volatile than Credit Agricole SA. It trades about -0.01 of its total potential returns per unit of risk. Credit Agricole SA is currently generating about 0.39 per unit of volatility. If you would invest  1,331  in Credit Agricole SA on December 30, 2024 and sell it today you would earn a total of  364.00  from holding Credit Agricole SA or generate 27.35% return on investment over 90 days.

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

Carrefour SA  vs.  Credit Agricole SA

Carrefour SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carrefour SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Carrefour 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

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole SA are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Credit Agricole sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carrefour and Credit Agricole

The main advantage of trading using opposite Carrefour and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour 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 Carrefour 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.