Correlation Between Capgemini and Entreparticuli

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

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

Diversification Opportunities for Capgemini and Entreparticuli

0.72

Correlation Coefficient

Capgemini  Entreparticuli

Poor diversification

The 3 months correlation between Capgemini and Entreparticuli is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Entreparticuli in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entreparticuli and Capgemini 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 Capgemini SE are associated (or correlated) with Entreparticuli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entreparticuli has no effect on the direction of Capgemini i.e., Capgemini and Entreparticuli go up and down completely randomly.

Pair Corralation between Capgemini and Entreparticuli

Assuming the 90 days trading horizon Capgemini SE is expected to generate 0.63 times more return on investment than Entreparticuli. However, Capgemini SE is 1.58 times less risky than Entreparticuli. It trades about -0.15 of its potential returns per unit of risk. Entreparticuli is currently generating about -0.13 per unit of risk. If you would invest  18,325  in Capgemini SE on September 4, 2024 and sell it today you would lose (3,240) from holding Capgemini SE or give up 17.68% of portfolio value over 90 days.

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

Capgemini SE  vs.  Entreparticuli

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.

Entreparticuli

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Entreparticuli has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Capgemini and Entreparticuli

The main advantage of trading using opposite Capgemini and Entreparticuli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini position performs unexpectedly, Entreparticuli 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 Entreparticuli will offset losses from the drop in Entreparticuli's long position.

The idea behind Capgemini SE and Entreparticuli 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.