Correlation Between Manitou BF and Capgemini

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

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

Diversification Opportunities for Manitou BF and Capgemini

0.47

Correlation Coefficient

Manitou BF  Capgemini

Very weak diversification

The 3 months correlation between Manitou and Capgemini is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Manitou BF SA and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Manitou BF 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 Manitou BF 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 Manitou BF i.e., Manitou BF and Capgemini go up and down completely randomly.

Pair Corralation between Manitou BF and Capgemini

Assuming the 90 days trading horizon Manitou BF SA is expected to generate 1.52 times more return on investment than Capgemini. However, Manitou BF is 1.52 times more volatile than Capgemini SE. It trades about 0.07 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.05 per unit of risk. If you would invest  1,678  in Manitou BF SA on December 31, 2024 and sell it today you would earn a total of  196.00  from holding Manitou BF SA or generate 11.68% return on investment over 90 days.

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

Manitou BF SA  vs.  Capgemini SE

Manitou BF SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Manitou BF SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Manitou BF sustained solid returns over the last few months and may actually be approaching a breakup point.

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Manitou BF and Capgemini

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

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.