Correlation Between Reacap Financial and Credit Agricole

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

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

Diversification Opportunities for Reacap Financial and Credit Agricole

0.71

Correlation Coefficient

Reacap Financial  Credit Agricole

Poor diversification

The 3 months correlation between Reacap and Credit is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Reacap Financial Investments and Credit Agricole Egypt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credit Agricole Egypt and Reacap Financial 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 Reacap Financial Investments 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 Egypt has no effect on the direction of Reacap Financial i.e., Reacap Financial and Credit Agricole go up and down completely randomly.

Pair Corralation between Reacap Financial and Credit Agricole

Assuming the 90 days trading horizon Reacap Financial is expected to generate 2.03 times less return on investment than Credit Agricole. In addition to that, Reacap Financial is 1.55 times more volatile than Credit Agricole Egypt. It trades about 0.07 of its total potential returns per unit of risk. Credit Agricole Egypt is currently generating about 0.23 per unit of volatility. If you would invest  1,900  in Credit Agricole Egypt on December 30, 2024 and sell it today you would earn a total of  331.00  from holding Credit Agricole Egypt or generate 17.42% return on investment over 90 days.

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

Reacap Financial Investments  vs.  Credit Agricole Egypt

Reacap Financial Inv

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Reacap Financial Investments are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Reacap Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Credit Agricole Egypt

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Credit Agricole Egypt are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Credit Agricole reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Reacap Financial and Credit Agricole

The main advantage of trading using opposite Reacap Financial and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reacap Financial 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 Reacap Financial Investments and Credit Agricole Egypt 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.