Correlation Between Capgemini and Crypto

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

By analyzing existing cross correlation between Capgemini SE and Crypto Co, you can compare the effects of market volatilities on Capgemini and Crypto 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 Crypto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and Crypto.

Diversification Opportunities for Capgemini and Crypto

-0.02

Correlation Coefficient

Capgemini  Crypto

Good diversification

The 3 months correlation between Capgemini and Crypto is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Crypto Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crypto 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 Crypto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crypto has no effect on the direction of Capgemini i.e., Capgemini and Crypto go up and down completely randomly.

Pair Corralation between Capgemini and Crypto

Assuming the 90 days horizon Capgemini SE is expected to generate 0.25 times more return on investment than Crypto. However, Capgemini SE is 3.96 times less risky than Crypto. It trades about -0.07 of its potential returns per unit of risk. Crypto Co is currently generating about -0.22 per unit of risk. If you would invest  16,824  in Capgemini SE on October 10, 2024 and sell it today you would lose (594.00) from holding Capgemini SE or give up 3.53% of portfolio value over 90 days.

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

Capgemini SE  vs.  Crypto Co

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 fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Crypto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crypto Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Capgemini and Crypto

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

The idea behind Capgemini SE and Crypto Co 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.