Correlation Between Capgemini and Accenture Plc

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

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

Diversification Opportunities for Capgemini and Accenture Plc

-0.59

Correlation Coefficient

Capgemini  Accenture Plc

Excellent diversification

The 3 months correlation between Capgemini and Accenture is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc 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 Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of Capgemini i.e., Capgemini and Accenture Plc go up and down completely randomly.

Pair Corralation between Capgemini and Accenture Plc

Assuming the 90 days horizon Capgemini is expected to generate 5.52 times less return on investment than Accenture Plc. In addition to that, Capgemini is 1.04 times more volatile than Accenture plc. It trades about 0.01 of its total potential returns per unit of risk. Accenture plc is currently generating about 0.05 per unit of volatility. If you would invest  24,238  in Accenture plc on September 22, 2024 and sell it today you would earn a total of  10,892  from holding Accenture plc or generate 44.94% return on investment over 90 days.

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

Capgemini SE  vs.  Accenture plc

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 uncertain 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.

Accenture plc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Accenture plc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Accenture Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capgemini and Accenture Plc

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

The idea behind Capgemini SE and Accenture plc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.