Correlation Between Crdit Agricole and Rocket Internet

Can any of the company-specific risk be diversified away by investing in both Crdit Agricole and Rocket Internet 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 Crdit Agricole and Rocket Internet 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 Rocket Internet SE, you can compare the effects of market volatilities on Crdit Agricole and Rocket Internet 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 Crdit Agricole with a short position of Rocket Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crdit Agricole and Rocket Internet.

Diversification Opportunities for Crdit Agricole and Rocket Internet

0.04

Correlation Coefficient

Crdit Agricole  Rocket Internet

Significant diversification

The 3 months correlation between Crdit and Rocket is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Crdit Agricole SA and Rocket Internet SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rocket Internet SE and Crdit 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 Rocket Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rocket Internet SE has no effect on the direction of Crdit Agricole i.e., Crdit Agricole and Rocket Internet go up and down completely randomly.

Pair Corralation between Crdit Agricole and Rocket Internet

Assuming the 90 days horizon Crdit Agricole SA is expected to generate 0.6 times more return on investment than Rocket Internet. However, Crdit Agricole SA is 1.66 times less risky than Rocket Internet. It trades about 0.39 of its potential returns per unit of risk. Rocket Internet SE is currently generating about 0.06 per unit of risk. If you would invest  1,298  in Crdit Agricole SA on October 24, 2024 and sell it today you would earn a total of  119.00  from holding Crdit Agricole SA or generate 9.17% return on investment over 90 days.

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

Crdit Agricole SA  vs.  Rocket Internet SE

Crdit Agricole SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crdit Agricole SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Crdit Agricole is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Rocket Internet SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rocket Internet SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Rocket Internet is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Crdit Agricole and Rocket Internet

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

The idea behind Crdit Agricole SA and Rocket Internet SE 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.