Correlation Between INTERNET INJPADR and Crédit Agricole

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

By analyzing existing cross correlation between INTERNET INJPADR 1 and Crdit Agricole SA, you can compare the effects of market volatilities on INTERNET INJPADR and Crédit 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 INTERNET INJPADR with a short position of Crédit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNET INJPADR and Crédit Agricole.

Diversification Opportunities for INTERNET INJPADR and Crédit Agricole

-0.67

Correlation Coefficient

INTERNET INJPADR  Crédit Agricole

Excellent diversification

The 3 months correlation between INTERNET and Crédit is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding INTERNET INJPADR 1 and Crdit Agricole SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crdit Agricole SA and INTERNET INJPADR 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 INTERNET INJPADR 1 are associated (or correlated) with Crédit Agricole. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crdit Agricole SA has no effect on the direction of INTERNET INJPADR i.e., INTERNET INJPADR and Crédit Agricole go up and down completely randomly.

Pair Corralation between INTERNET INJPADR and Crédit Agricole

Assuming the 90 days horizon INTERNET INJPADR 1 is expected to under-perform the Crédit Agricole. In addition to that, INTERNET INJPADR is 1.71 times more volatile than Crdit Agricole SA. It trades about -0.28 of its total potential returns per unit of risk. Crdit Agricole SA is currently generating about -0.01 per unit of volatility. If you would invest  1,323  in Crdit Agricole SA on October 10, 2024 and sell it today you would lose (4.00) from holding Crdit Agricole SA or give up 0.3% of portfolio value over 90 days.

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

INTERNET INJPADR 1  vs.  Crdit Agricole SA

INTERNET INJPADR 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INTERNET INJPADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, INTERNET INJPADR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Crdit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crdit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Crédit Agricole is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with INTERNET INJPADR and Crédit Agricole

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

The idea behind INTERNET INJPADR 1 and Crdit 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.