Correlation Between Capgemini and Crayon Group

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

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

Diversification Opportunities for Capgemini and Crayon Group

0.92

Correlation Coefficient

Capgemini  Crayon Group

Almost no diversification

The 3 months correlation between Capgemini and Crayon is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE ADR and Crayon Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crayon Group Holding 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 ADR are associated (or correlated) with Crayon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crayon Group Holding has no effect on the direction of Capgemini i.e., Capgemini and Crayon Group go up and down completely randomly.

Pair Corralation between Capgemini and Crayon Group

Assuming the 90 days horizon Capgemini is expected to generate 9.63 times less return on investment than Crayon Group. But when comparing it to its historical volatility, Capgemini SE ADR is 2.25 times less risky than Crayon Group. It trades about 0.01 of its potential returns per unit of risk. Crayon Group Holding is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  952.00  in Crayon Group Holding on September 26, 2024 and sell it today you would earn a total of  168.00  from holding Crayon Group Holding or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.8%
Values	Daily Returns

Capgemini SE ADR  vs.  Crayon Group Holding

Capgemini SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capgemini SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Crayon Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Capgemini and Crayon Group

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

The idea behind Capgemini SE ADR and Crayon Group Holding 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.