Correlation Between Capgemini and Datametrex

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

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

Diversification Opportunities for Capgemini and Datametrex

-0.43

Correlation Coefficient

Capgemini  Datametrex

Very good diversification

The 3 months correlation between Capgemini and Datametrex is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Datametrex AI Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datametrex AI 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 are associated (or correlated) with Datametrex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datametrex AI Limited has no effect on the direction of Capgemini i.e., Capgemini and Datametrex go up and down completely randomly.

Pair Corralation between Capgemini and Datametrex

Assuming the 90 days horizon Capgemini SE is expected to under-perform the Datametrex. But the stock apears to be less risky and, when comparing its historical volatility, Capgemini SE is 96.63 times less risky than Datametrex. The stock trades about -0.03 of its potential returns per unit of risk. The Datametrex AI Limited is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  0.26  in Datametrex AI Limited on September 23, 2024 and sell it today you would earn a total of  0.24  from holding Datametrex AI Limited or generate 92.31% 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.  Datametrex AI Limited

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.

Datametrex AI Limited

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Datametrex AI Limited are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Datametrex reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capgemini and Datametrex

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

The idea behind Capgemini SE and Datametrex AI 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.