Correlation Between Capgemini and Data Storage

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

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

Diversification Opportunities for Capgemini and Data Storage

-0.59

Correlation Coefficient

Capgemini  Data Storage

Excellent diversification

The 3 months correlation between Capgemini and Data is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Data Storage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Storage Corp 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 Data Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Storage Corp has no effect on the direction of Capgemini i.e., Capgemini and Data Storage go up and down completely randomly.

Pair Corralation between Capgemini and Data Storage

Assuming the 90 days horizon Capgemini SE is expected to under-perform the Data Storage. But the pink sheet apears to be less risky and, when comparing its historical volatility, Capgemini SE is 2.35 times less risky than Data Storage. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Data Storage Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  376.00  in Data Storage Corp on October 6, 2024 and sell it today you would earn a total of  112.00  from holding Data Storage Corp or generate 29.79% return on investment over 90 days.

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

Capgemini SE  vs.  Data Storage Corp

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.

Data Storage Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data Storage Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Data Storage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capgemini and Data Storage

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

The idea behind Capgemini SE and Data Storage Corp 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..