Correlation Between Capgemini and Amadeus IT

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

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

Diversification Opportunities for Capgemini and Amadeus IT

-0.52

Correlation Coefficient

Capgemini  Amadeus IT

Excellent diversification

The 3 months correlation between Capgemini and Amadeus is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Amadeus IT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amadeus IT 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 are associated (or correlated) with Amadeus IT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amadeus IT Group has no effect on the direction of Capgemini i.e., Capgemini and Amadeus IT go up and down completely randomly.

Pair Corralation between Capgemini and Amadeus IT

Assuming the 90 days horizon Capgemini SE is expected to under-perform the Amadeus IT. In addition to that, Capgemini is 1.4 times more volatile than Amadeus IT Group. It trades about -0.03 of its total potential returns per unit of risk. Amadeus IT Group is currently generating about 0.02 per unit of volatility. If you would invest  6,624  in Amadeus IT Group on September 23, 2024 and sell it today you would earn a total of  14.00  from holding Amadeus IT Group or generate 0.21% return on investment over 90 days.

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

Capgemini SE  vs.  Amadeus IT Group

Capgemini SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Amadeus IT Group

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amadeus IT Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Amadeus IT 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 Amadeus IT

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

The idea behind Capgemini SE and Amadeus IT 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.