Correlation Between Hotel Majestic and Credit Agricole

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

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

Diversification Opportunities for Hotel Majestic and Credit Agricole

0.11

Correlation Coefficient

Hotel Majestic  Credit Agricole

Average diversification

The 3 months correlation between Hotel and Credit is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Hotel Majestic Cannes 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 Hotel Majestic 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 Hotel Majestic Cannes 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 Hotel Majestic i.e., Hotel Majestic and Credit Agricole go up and down completely randomly.

Pair Corralation between Hotel Majestic and Credit Agricole

Assuming the 90 days trading horizon Hotel Majestic is expected to generate 30.62 times less return on investment than Credit Agricole. In addition to that, Hotel Majestic is 2.08 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 0.52 per unit of volatility. If you would invest  1,251  in Credit Agricole SA on December 3, 2024 and sell it today you would earn a total of  362.00  from holding Credit Agricole SA or generate 28.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Hotel Majestic Cannes  vs.  Credit Agricole SA

Hotel Majestic Cannes

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hotel Majestic Cannes has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Hotel Majestic is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Credit Agricole SA

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole SA are ranked lower than 40 (%) 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 Hotel Majestic and Credit Agricole

The main advantage of trading using opposite Hotel Majestic and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hotel Majestic 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 Hotel Majestic Cannes 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 Global Correlations module to find global opportunities by holding instruments from different markets.