Correlation Between Credit Agricole and Advanced Drainage

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

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

Diversification Opportunities for Credit Agricole and Advanced Drainage

0.35

Correlation Coefficient

Credit Agricole  Advanced Drainage

Weak diversification

The 3 months correlation between Credit and Advanced is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole SA and Advanced Drainage Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Drainage Systems and Credit 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 Credit Agricole SA are associated (or correlated) with Advanced Drainage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Drainage Systems has no effect on the direction of Credit Agricole i.e., Credit Agricole and Advanced Drainage go up and down completely randomly.

Pair Corralation between Credit Agricole and Advanced Drainage

Assuming the 90 days horizon Credit Agricole is expected to generate 258.75 times less return on investment than Advanced Drainage. But when comparing it to its historical volatility, Credit Agricole SA is 1.92 times less risky than Advanced Drainage. It trades about 0.0 of its potential returns per unit of risk. Advanced Drainage Systems is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  11,934  in Advanced Drainage Systems on July 9, 2025 and sell it today you would earn a total of  2,216  from holding Advanced Drainage Systems or generate 18.57% return on investment over 90 days.

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

Credit Agricole SA  vs.  Advanced Drainage Systems

Credit Agricole SA

Risk-Adjusted Performance

Weakest

Over the last 90 days Credit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Credit Agricole is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advanced Drainage Systems

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Drainage Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating primary indicators, Advanced Drainage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Credit Agricole and Advanced Drainage

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

The idea behind Credit Agricole SA and Advanced Drainage Systems 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.