Correlation Between Crayon Group and Capgemini

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

By analyzing existing cross correlation between Crayon Group Holding and Capgemini SE ADR, you can compare the effects of market volatilities on Crayon Group and Capgemini 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 Crayon Group with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crayon Group and Capgemini.

Diversification Opportunities for Crayon Group and Capgemini

0.9

Correlation Coefficient

Crayon Group  Capgemini

Almost no diversification

The 3 months correlation between Crayon and Capgemini is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Crayon Group Holding and Capgemini SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE ADR and Crayon Group 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 Crayon Group Holding are associated (or correlated) with Capgemini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capgemini SE ADR has no effect on the direction of Crayon Group i.e., Crayon Group and Capgemini go up and down completely randomly.

Pair Corralation between Crayon Group and Capgemini

Assuming the 90 days horizon Crayon Group Holding is expected to generate 2.28 times more return on investment than Capgemini. However, Crayon Group is 2.28 times more volatile than Capgemini SE ADR. It trades about 0.21 of its potential returns per unit of risk. Capgemini SE ADR is currently generating about 0.09 per unit of risk. If you would invest  985.00  in Crayon Group Holding on September 27, 2024 and sell it today you would earn a total of  135.00  from holding Crayon Group Holding or generate 13.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Crayon Group Holding  vs.  Capgemini SE ADR

Crayon Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Capgemini SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capgemini SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Crayon Group and Capgemini

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

The idea behind Crayon Group Holding and Capgemini SE ADR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.