Correlation Between Capgemini and Flint Telecom

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

Diversification Opportunities for Capgemini and Flint Telecom

0.71

Correlation Coefficient

Capgemini  Flint Telecom

Poor diversification

The 3 months correlation between Capgemini and Flint is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE ADR and Flint Telecom Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flint Telecom Group 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 Flint Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flint Telecom Group has no effect on the direction of Capgemini i.e., Capgemini and Flint Telecom go up and down completely randomly.

Pair Corralation between Capgemini and Flint Telecom

Assuming the 90 days horizon Capgemini is expected to generate 43.58 times less return on investment than Flint Telecom. But when comparing it to its historical volatility, Capgemini SE ADR is 8.55 times less risky than Flint Telecom. It trades about 0.03 of its potential returns per unit of risk. Flint Telecom Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  100.00  in Flint Telecom Group on September 23, 2024 and sell it today you would earn a total of  27.00  from holding Flint Telecom Group or generate 27.0% return on investment over 90 days.

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

Capgemini SE ADR  vs.  Flint Telecom Group

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.

Flint Telecom Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Flint Telecom Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile basic indicators, Flint Telecom reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capgemini and Flint Telecom

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

The idea behind Capgemini SE ADR and Flint Telecom Group 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.