Correlation Between Arab Aluminum and Credit Agricole
Can any of the company-specific risk be diversified away by investing in both Arab Aluminum 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 Arab Aluminum and Credit Agricole into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arab Aluminum and Credit Agricole Egypt, you can compare the effects of market volatilities on Arab Aluminum 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 Arab Aluminum with a short position of Credit Agricole. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arab Aluminum and Credit Agricole.
Diversification Opportunities for Arab Aluminum and Credit Agricole
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arab and Credit is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Arab Aluminum 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 Arab Aluminum 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 Arab Aluminum 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 Arab Aluminum i.e., Arab Aluminum and Credit Agricole go up and down completely randomly.
Pair Corralation between Arab Aluminum and Credit Agricole
Assuming the 90 days trading horizon Arab Aluminum is expected to generate 11.01 times more return on investment than Credit Agricole. However, Arab Aluminum is 11.01 times more volatile than Credit Agricole Egypt. It trades about 0.04 of its potential returns per unit of risk. Credit Agricole Egypt is currently generating about 0.07 per unit of risk. If you would invest 4,209 in Arab Aluminum on October 25, 2024 and sell it today you would lose (2,749) from holding Arab Aluminum or give up 65.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arab Aluminum vs. Credit Agricole Egypt
Performance |
| Timeline |
| Arab Aluminum |
| Credit Agricole Egypt |
Arab Aluminum and Credit Agricole Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arab Aluminum and Credit Agricole
The main advantage of trading using opposite Arab Aluminum and Credit Agricole positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arab Aluminum 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.| Arab Aluminum vs. Arab Moltaka Investments | Arab Aluminum vs. Industrial Engineering Projects | Arab Aluminum vs. Union National Bank | Arab Aluminum vs. Nile City Investment |
| Credit Agricole vs. Egyptian Media Production | Credit Agricole vs. Atlas For Investment | Credit Agricole vs. Delta Insurance | Credit Agricole vs. Egyptian Iron Steel |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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