Correlation Between Capgemini and Atea ASA

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

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

Diversification Opportunities for Capgemini and Atea ASA

0.17

Correlation Coefficient

Capgemini  Atea ASA

Average diversification

The 3 months correlation between Capgemini and Atea is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA 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 Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Capgemini i.e., Capgemini and Atea ASA go up and down completely randomly.

Pair Corralation between Capgemini and Atea ASA

Assuming the 90 days horizon Capgemini SE is expected to under-perform the Atea ASA. In addition to that, Capgemini is 1.43 times more volatile than Atea ASA. It trades about -0.04 of its total potential returns per unit of risk. Atea ASA is currently generating about -0.02 per unit of volatility. If you would invest  1,164  in Atea ASA on December 22, 2024 and sell it today you would lose (26.00) from holding Atea ASA or give up 2.23% of portfolio value over 90 days.

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

Capgemini SE  vs.  Atea ASA

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.

Atea ASA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Capgemini and Atea ASA

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

The idea behind Capgemini SE and Atea ASA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.