Correlation Between Capgemini and WNS Holdings

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

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

Diversification Opportunities for Capgemini and WNS Holdings

-0.33

Correlation Coefficient

Capgemini  WNS Holdings

Very good diversification

The 3 months correlation between Capgemini and WNS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and WNS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WNS Holdings 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 WNS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WNS Holdings has no effect on the direction of Capgemini i.e., Capgemini and WNS Holdings go up and down completely randomly.

Pair Corralation between Capgemini and WNS Holdings

Assuming the 90 days horizon Capgemini SE is expected to under-perform the WNS Holdings. In addition to that, Capgemini is 1.04 times more volatile than WNS Holdings. It trades about -0.06 of its total potential returns per unit of risk. WNS Holdings is currently generating about -0.02 per unit of volatility. If you would invest  4,834  in WNS Holdings on October 6, 2024 and sell it today you would lose (135.00) from holding WNS Holdings or give up 2.79% 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.  WNS Holdings

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.

WNS Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WNS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WNS Holdings is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Capgemini and WNS Holdings

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

The idea behind Capgemini SE and WNS Holdings 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.