Correlation Between TSS, Common and Capgemini

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

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

Diversification Opportunities for TSS, Common and Capgemini

0.74

Correlation Coefficient

TSS, Common  Capgemini

Poor diversification

The 3 months correlation between TSS, and Capgemini is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding TSS, Common Stock 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 TSS, Common 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 TSS, Common Stock 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 TSS, Common i.e., TSS, Common and Capgemini go up and down completely randomly.

Pair Corralation between TSS, Common and Capgemini

Given the investment horizon of 90 days TSS, Common Stock is expected to under-perform the Capgemini. In addition to that, TSS, Common is 3.2 times more volatile than Capgemini SE ADR. It trades about -0.05 of its total potential returns per unit of risk. Capgemini SE ADR is currently generating about -0.01 per unit of volatility. If you would invest  3,227  in Capgemini SE ADR on December 29, 2024 and sell it today you would lose (86.00) from holding Capgemini SE ADR or give up 2.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

TSS, Common Stock  vs.  Capgemini SE ADR

TSS, Common Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days TSS, Common Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Capgemini SE ADR

Risk-Adjusted Performance

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 fairly strong primary indicators, Capgemini is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TSS, Common and Capgemini

The main advantage of trading using opposite TSS, Common and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSS, Common 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 TSS, Common Stock 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.