Correlation Between Capgemini and Quisitive Technology

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

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

Diversification Opportunities for Capgemini and Quisitive Technology

0.23

Correlation Coefficient

Capgemini  Quisitive Technology

Modest diversification

The 3 months correlation between Capgemini and Quisitive is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Quisitive Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quisitive Technology 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 Quisitive Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quisitive Technology has no effect on the direction of Capgemini i.e., Capgemini and Quisitive Technology go up and down completely randomly.

Pair Corralation between Capgemini and Quisitive Technology

Assuming the 90 days horizon Capgemini SE is expected to under-perform the Quisitive Technology. But the pink sheet apears to be less risky and, when comparing its historical volatility, Capgemini SE is 1.95 times less risky than Quisitive Technology. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Quisitive Technology Solutions is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  26.00  in Quisitive Technology Solutions on December 23, 2024 and sell it today you would earn a total of  13.00  from holding Quisitive Technology Solutions or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.8%
Values	Daily Returns

Capgemini SE  vs.  Quisitive Technology Solutions

Capgemini SE

Risk-Adjusted Performance

Very Weak

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

Quisitive Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quisitive Technology Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Quisitive Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capgemini and Quisitive Technology

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

The idea behind Capgemini SE and Quisitive Technology Solutions 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.