Correlation Between Pernod Ricard and Capgemini

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

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

Diversification Opportunities for Pernod Ricard and Capgemini

0.34

Correlation Coefficient

Pernod Ricard  Capgemini

Weak diversification

The 3 months correlation between Pernod and Capgemini is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Pernod Ricard SA and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Pernod Ricard 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 Pernod Ricard 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 Pernod Ricard i.e., Pernod Ricard and Capgemini go up and down completely randomly.

Pair Corralation between Pernod Ricard and Capgemini

Assuming the 90 days horizon Pernod Ricard SA is expected to under-perform the Capgemini. But the stock apears to be less risky and, when comparing its historical volatility, Pernod Ricard SA is 1.19 times less risky than Capgemini. The stock trades about -0.12 of its potential returns per unit of risk. The Capgemini SE is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  15,815  in Capgemini SE on December 31, 2024 and sell it today you would lose (1,285) from holding Capgemini SE or give up 8.13% of portfolio value over 90 days.

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

Pernod Ricard SA  vs.  Capgemini SE

Pernod Ricard SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pernod Ricard SA 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 May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 Pernod Ricard and Capgemini

The main advantage of trading using opposite Pernod Ricard and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pernod Ricard 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 Pernod Ricard 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.