Correlation Between Ryanair Holdings and Capgemini

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

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

Diversification Opportunities for Ryanair Holdings and Capgemini

-0.9

Correlation Coefficient

Ryanair Holdings  Capgemini

Pay attention - limited upside

The 3 months correlation between Ryanair and Capgemini is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Ryanair Holdings plc and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Ryanair Holdings 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 Ryanair Holdings plc 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 Ryanair Holdings i.e., Ryanair Holdings and Capgemini go up and down completely randomly.

Pair Corralation between Ryanair Holdings and Capgemini

Assuming the 90 days trading horizon Ryanair Holdings plc is expected to generate 1.03 times more return on investment than Capgemini. However, Ryanair Holdings is 1.03 times more volatile than Capgemini SE. It trades about 0.23 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.18 per unit of risk. If you would invest  1,530  in Ryanair Holdings plc on September 14, 2024 and sell it today you would earn a total of  410.00  from holding Ryanair Holdings plc or generate 26.8% return on investment over 90 days.

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

Ryanair Holdings plc  vs.  Capgemini SE

Ryanair Holdings plc

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ryanair Holdings plc are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Ryanair Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Ryanair Holdings and Capgemini

The main advantage of trading using opposite Ryanair Holdings and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ryanair Holdings 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 Ryanair Holdings plc 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.