Correlation Between Datametrex and Capgemini

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

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

Diversification Opportunities for Datametrex and Capgemini

0.2

Correlation Coefficient

Datametrex  Capgemini

Modest diversification

The 3 months correlation between Datametrex and Capgemini is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Datametrex AI Limited 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 Datametrex 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 Datametrex AI Limited 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 Datametrex i.e., Datametrex and Capgemini go up and down completely randomly.

Pair Corralation between Datametrex and Capgemini

Assuming the 90 days horizon Datametrex AI Limited is expected to generate 16.99 times more return on investment than Capgemini. However, Datametrex is 16.99 times more volatile than Capgemini SE ADR. It trades about 0.03 of its potential returns per unit of risk. Capgemini SE ADR is currently generating about 0.03 per unit of risk. If you would invest  0.52  in Datametrex AI Limited on September 23, 2024 and sell it today you would lose (0.15) from holding Datametrex AI Limited or give up 28.85% of portfolio value over 90 days.

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

Datametrex AI Limited  vs.  Capgemini SE ADR

Datametrex AI Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datametrex AI Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Datametrex reported solid returns over the last few months and may actually be approaching a breakup point.

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 Datametrex and Capgemini

The main advantage of trading using opposite Datametrex and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datametrex 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 Datametrex AI Limited 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 Stocks Directory module to find actively traded stocks across global markets.