Correlation Between Capgemini and Deveron Corp

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

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

Diversification Opportunities for Capgemini and Deveron Corp

0.0

Correlation Coefficient

Capgemini  Deveron Corp

Pay attention - limited upside

The 3 months correlation between Capgemini and Deveron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Deveron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deveron 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 Deveron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deveron Corp has no effect on the direction of Capgemini i.e., Capgemini and Deveron Corp go up and down completely randomly.

Pair Corralation between Capgemini and Deveron Corp

Assuming the 90 days horizon Capgemini SE is expected to generate 0.4 times more return on investment than Deveron Corp. However, Capgemini SE is 2.48 times less risky than Deveron Corp. It trades about 0.0 of its potential returns per unit of risk. Deveron Corp is currently generating about -0.07 per unit of risk. If you would invest  17,819  in Capgemini SE on October 22, 2024 and sell it today you would lose (1,380) from holding Capgemini SE or give up 7.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

Capgemini SE  vs.  Deveron Corp

Capgemini SE

Risk-Adjusted Performance

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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.

Deveron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Deveron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Deveron Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Capgemini and Deveron Corp

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

The idea behind Capgemini SE and Deveron 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.