Correlation Between Maat Pharma and Capgemini

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

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

Diversification Opportunities for Maat Pharma and Capgemini

-0.74

Correlation Coefficient

Maat Pharma  Capgemini

Pay attention - limited upside

The 3 months correlation between Maat and Capgemini is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Maat Pharma SA and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Maat Pharma 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 Maat Pharma SA 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 Maat Pharma i.e., Maat Pharma and Capgemini go up and down completely randomly.

Pair Corralation between Maat Pharma and Capgemini

Assuming the 90 days trading horizon Maat Pharma is expected to generate 1.29 times less return on investment than Capgemini. In addition to that, Maat Pharma is 1.44 times more volatile than Capgemini SE. It trades about 0.06 of its total potential returns per unit of risk. Capgemini SE is currently generating about 0.11 per unit of volatility. If you would invest  15,275  in Capgemini SE on September 27, 2024 and sell it today you would earn a total of  325.00  from holding Capgemini SE or generate 2.13% return on investment over 90 days.

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

Maat Pharma SA  vs.  Capgemini SE

Maat Pharma SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Maat Pharma SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maat Pharma 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 Maat Pharma and Capgemini

The main advantage of trading using opposite Maat Pharma and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maat Pharma 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 Maat Pharma SA 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .