Correlation Between Capgemini and CSE Global

Can any of the company-specific risk be diversified away by investing in both Capgemini and CSE Global 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 CSE Global 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 CSE Global Limited, you can compare the effects of market volatilities on Capgemini and CSE Global 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 CSE Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and CSE Global.

Diversification Opportunities for Capgemini and CSE Global

-0.1

Correlation Coefficient

Capgemini  CSE Global

Good diversification

The 3 months correlation between Capgemini and CSE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE ADR and CSE Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSE Global Limited 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 CSE Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSE Global Limited has no effect on the direction of Capgemini i.e., Capgemini and CSE Global go up and down completely randomly.

Pair Corralation between Capgemini and CSE Global

Assuming the 90 days horizon Capgemini SE ADR is expected to under-perform the CSE Global. But the pink sheet apears to be less risky and, when comparing its historical volatility, Capgemini SE ADR is 1.28 times less risky than CSE Global. The pink sheet trades about -0.05 of its potential returns per unit of risk. The CSE Global Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  29.00  in CSE Global Limited on September 4, 2024 and sell it today you would earn a total of  6.00  from holding CSE Global Limited or generate 20.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Capgemini SE ADR  vs.  CSE Global Limited

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 weak 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.

CSE Global Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSE Global Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, CSE Global 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 CSE Global

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

The idea behind Capgemini SE ADR and CSE Global Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.