Correlation Between Crédit Agricole and OTP Bank

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

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

Diversification Opportunities for Crédit Agricole and OTP Bank

0.89

Correlation Coefficient

Crédit Agricole  OTP Bank

Very poor diversification

The 3 months correlation between Crédit and OTP is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Crdit Agricole SA and OTP Bank Nyrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OTP Bank Nyrt and Crédit 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 Crdit Agricole SA are associated (or correlated) with OTP Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OTP Bank Nyrt has no effect on the direction of Crédit Agricole i.e., Crédit Agricole and OTP Bank go up and down completely randomly.

Pair Corralation between Crédit Agricole and OTP Bank

Assuming the 90 days horizon Crdit Agricole SA is expected to generate 0.72 times more return on investment than OTP Bank. However, Crdit Agricole SA is 1.38 times less risky than OTP Bank. It trades about 0.32 of its potential returns per unit of risk. OTP Bank Nyrt is currently generating about 0.19 per unit of risk. If you would invest  1,300  in Crdit Agricole SA on December 19, 2024 and sell it today you would earn a total of  356.00  from holding Crdit Agricole SA or generate 27.38% return on investment over 90 days.

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

Crdit Agricole SA  vs.  OTP Bank Nyrt

Crdit Agricole SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crdit Agricole SA are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Crédit Agricole reported solid returns over the last few months and may actually be approaching a breakup point.

OTP Bank Nyrt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in OTP Bank Nyrt are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, OTP Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Crédit Agricole and OTP Bank

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

The idea behind Crdit Agricole SA and OTP Bank Nyrt 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.