Correlation Between Capgemini and Information Services

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

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

Diversification Opportunities for Capgemini and Information Services

0.06

Correlation Coefficient

Capgemini  Information Services

Significant diversification

The 3 months correlation between Capgemini and Information is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Information Services Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Capgemini i.e., Capgemini and Information Services go up and down completely randomly.

Pair Corralation between Capgemini and Information Services

Assuming the 90 days horizon Capgemini SE is expected to under-perform the Information Services. In addition to that, Capgemini is 1.0 times more volatile than Information Services International Dentsu. It trades about -0.04 of its total potential returns per unit of risk. Information Services International Dentsu is currently generating about 0.08 per unit of volatility. If you would invest  3,540  in Information Services International Dentsu on December 24, 2024 and sell it today you would earn a total of  300.00  from holding Information Services International Dentsu or generate 8.47% return on investment over 90 days.

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

Capgemini SE  vs.  Information Services Internati

Capgemini SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Capgemini SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Capgemini is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Information Services

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services International Dentsu are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Capgemini and Information Services

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

The idea behind Capgemini SE and Information Services International Dentsu 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.