Correlation Between Credit Agricole and Arabian Food

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

By analyzing existing cross correlation between Credit Agricole Egypt and Arabian Food Industries, you can compare the effects of market volatilities on Credit Agricole and Arabian Food 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 Arabian Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Agricole and Arabian Food.

Diversification Opportunities for Credit Agricole and Arabian Food

0.22

Correlation Coefficient

Credit Agricole  Arabian Food

Modest diversification

The 3 months correlation between Credit and Arabian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole Egypt and Arabian Food Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arabian Food Industries 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 Egypt are associated (or correlated) with Arabian Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arabian Food Industries has no effect on the direction of Credit Agricole i.e., Credit Agricole and Arabian Food go up and down completely randomly.

Pair Corralation between Credit Agricole and Arabian Food

Assuming the 90 days trading horizon Credit Agricole Egypt is expected to under-perform the Arabian Food. In addition to that, Credit Agricole is 2.29 times more volatile than Arabian Food Industries. It trades about -0.13 of its total potential returns per unit of risk. Arabian Food Industries is currently generating about 0.02 per unit of volatility. If you would invest  2,700  in Arabian Food Industries on October 25, 2024 and sell it today you would earn a total of  16.00  from holding Arabian Food Industries or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.0%
Values	Daily Returns

Credit Agricole Egypt  vs.  Arabian Food Industries

Credit Agricole Egypt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Agricole Egypt has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Arabian Food Industries

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arabian Food Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Arabian Food is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Credit Agricole and Arabian Food

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

The idea behind Credit Agricole Egypt and Arabian Food Industries 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.