Correlation Between Capgemini and Hotelim Socit

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

By analyzing existing cross correlation between Capgemini SE and Hotelim Socit Anonyme, you can compare the effects of market volatilities on Capgemini and Hotelim Socit 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 Capgemini with a short position of Hotelim Socit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and Hotelim Socit.

Diversification Opportunities for Capgemini and Hotelim Socit

0.14

Correlation Coefficient

Capgemini  Hotelim Socit

Average diversification

The 3 months correlation between Capgemini and Hotelim is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Hotelim Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotelim Socit Anonyme and Capgemini 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 Capgemini SE are associated (or correlated) with Hotelim Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotelim Socit Anonyme has no effect on the direction of Capgemini i.e., Capgemini and Hotelim Socit go up and down completely randomly.

Pair Corralation between Capgemini and Hotelim Socit

Assuming the 90 days trading horizon Capgemini SE is expected to under-perform the Hotelim Socit. But the stock apears to be less risky and, when comparing its historical volatility, Capgemini SE is 4.57 times less risky than Hotelim Socit. The stock trades about 0.0 of its potential returns per unit of risk. The Hotelim Socit Anonyme is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,880  in Hotelim Socit Anonyme on September 28, 2024 and sell it today you would earn a total of  820.00  from holding Hotelim Socit Anonyme or generate 28.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.81%
Values	Daily Returns

Capgemini SE  vs.  Hotelim Socit Anonyme

Capgemini SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capgemini SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hotelim Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotelim Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Capgemini and Hotelim Socit

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

The idea behind Capgemini SE and Hotelim Socit Anonyme 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.