Correlation Between Sidi Kerir and Credit Agricole

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

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

Diversification Opportunities for Sidi Kerir and Credit Agricole

-0.07

Correlation Coefficient

Sidi Kerir  Credit Agricole

Good diversification

The 3 months correlation between Sidi and Credit is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Sidi Kerir Petrochemicals 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 Sidi Kerir 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 Sidi Kerir Petrochemicals 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 Sidi Kerir i.e., Sidi Kerir and Credit Agricole go up and down completely randomly.

Pair Corralation between Sidi Kerir and Credit Agricole

Assuming the 90 days trading horizon Sidi Kerir Petrochemicals is expected to generate 2.86 times more return on investment than Credit Agricole. However, Sidi Kerir is 2.86 times more volatile than Credit Agricole Egypt. It trades about 0.22 of its potential returns per unit of risk. Credit Agricole Egypt is currently generating about -0.19 per unit of risk. 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

Sidi Kerir Petrochemicals  vs.  Credit Agricole Egypt

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.

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.

Pair Trading with Sidi Kerir and Credit Agricole

The main advantage of trading using opposite Sidi Kerir and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sidi Kerir 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 Sidi Kerir Petrochemicals 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.

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