Correlation Between Capstone Technologies and Globant SA

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

By analyzing existing cross correlation between Capstone Technologies Group and Globant SA, you can compare the effects of market volatilities on Capstone Technologies and Globant SA 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 Capstone Technologies with a short position of Globant SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capstone Technologies and Globant SA.

Diversification Opportunities for Capstone Technologies and Globant SA

0.35

Correlation Coefficient

Capstone Technologies  Globant SA

Weak diversification

The 3 months correlation between Capstone and Globant is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Capstone Technologies Group and Globant SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globant SA and Capstone Technologies 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 Capstone Technologies Group are associated (or correlated) with Globant SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globant SA has no effect on the direction of Capstone Technologies i.e., Capstone Technologies and Globant SA go up and down completely randomly.

Pair Corralation between Capstone Technologies and Globant SA

Given the investment horizon of 90 days Capstone Technologies Group is expected to generate 0.09 times more return on investment than Globant SA. However, Capstone Technologies Group is 11.67 times less risky than Globant SA. It trades about -0.13 of its potential returns per unit of risk. Globant SA is currently generating about -0.21 per unit of risk. If you would invest  36.00  in Capstone Technologies Group on December 30, 2024 and sell it today you would lose (1.00) from holding Capstone Technologies Group or give up 2.78% of portfolio value over 90 days.

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

Capstone Technologies Group  vs.  Globant SA

Capstone Technologies

Risk-Adjusted Performance

Very Weak

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

Globant SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globant SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Capstone Technologies and Globant SA

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

The idea behind Capstone Technologies Group and Globant SA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.