Correlation Between Caisse Regionale and Capgemini

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

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

Diversification Opportunities for Caisse Regionale and Capgemini

-0.91

Correlation Coefficient

Caisse Regionale  Capgemini

Pay attention - limited upside

The 3 months correlation between Caisse and Capgemini is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Caisse Regionale De and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Caisse Regionale 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 Caisse Regionale De 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 has no effect on the direction of Caisse Regionale i.e., Caisse Regionale and Capgemini go up and down completely randomly.

Pair Corralation between Caisse Regionale and Capgemini

Assuming the 90 days trading horizon Caisse Regionale De is expected to generate 0.43 times more return on investment than Capgemini. However, Caisse Regionale De is 2.33 times less risky than Capgemini. It trades about 0.13 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.16 per unit of risk. If you would invest  11,500  in Caisse Regionale De on September 2, 2024 and sell it today you would earn a total of  786.00  from holding Caisse Regionale De or generate 6.83% return on investment over 90 days.

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

Caisse Regionale De  vs.  Capgemini SE

Caisse Regionale

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caisse Regionale De are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Caisse Regionale may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat 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 Caisse Regionale and Capgemini

The main advantage of trading using opposite Caisse Regionale and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caisse Regionale 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 Caisse Regionale De and Capgemini SE 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.