Correlation Between Capgemini and Goldspot Discoveries

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

Diversification Opportunities for Capgemini and Goldspot Discoveries

0.89

Correlation Coefficient

Capgemini  Goldspot Discoveries

Very poor diversification

The 3 months correlation between Capgemini and Goldspot is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE ADR and Goldspot Discoveries Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldspot Discoveries Corp 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 Goldspot Discoveries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldspot Discoveries Corp has no effect on the direction of Capgemini i.e., Capgemini and Goldspot Discoveries go up and down completely randomly.

Pair Corralation between Capgemini and Goldspot Discoveries

Assuming the 90 days horizon Capgemini SE ADR is expected to generate 0.31 times more return on investment than Goldspot Discoveries. However, Capgemini SE ADR is 3.2 times less risky than Goldspot Discoveries. It trades about -0.1 of its potential returns per unit of risk. Goldspot Discoveries Corp is currently generating about -0.07 per unit of risk. If you would invest  3,353  in Capgemini SE ADR on October 11, 2024 and sell it today you would lose (104.00) from holding Capgemini SE ADR or give up 3.1% of portfolio value over 90 days.

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

Capgemini SE ADR  vs.  Goldspot Discoveries Corp

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Goldspot Discoveries Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldspot Discoveries Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental 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.

Pair Trading with Capgemini and Goldspot Discoveries

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

The idea behind Capgemini SE ADR and Goldspot Discoveries Corp 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.