Correlation Between Credit Agricole and Sidi Kerir

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

Diversification Opportunities for Credit Agricole and Sidi Kerir

-0.07

Correlation Coefficient

Credit Agricole  Sidi Kerir

Good diversification

The 3 months correlation between Credit and Sidi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole Egypt and Sidi Kerir Petrochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sidi Kerir Petrochemicals 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 Sidi Kerir. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sidi Kerir Petrochemicals has no effect on the direction of Credit Agricole i.e., Credit Agricole and Sidi Kerir go up and down completely randomly.

Pair Corralation between Credit Agricole and Sidi Kerir

Assuming the 90 days trading horizon Credit Agricole Egypt is expected to under-perform the Sidi Kerir. But the stock apears to be less risky and, when comparing its historical volatility, Credit Agricole Egypt is 2.86 times less risky than Sidi Kerir. The stock trades about -0.19 of its potential returns per unit of risk. The Sidi Kerir Petrochemicals is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,903  in Sidi Kerir Petrochemicals on October 22, 2024 and sell it today you would earn a total of  167.00  from holding Sidi Kerir Petrochemicals or generate 8.78% return on investment over 90 days.

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

Credit Agricole Egypt  vs.  Sidi Kerir Petrochemicals

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 nearly stable technical and fundamental indicators, Credit Agricole is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sidi Kerir Petrochemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sidi Kerir Petrochemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Sidi Kerir 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 Sidi Kerir

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

The idea behind Credit Agricole Egypt and Sidi Kerir Petrochemicals 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.