Correlation Between Capgemini and GBT Technologies

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

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

Diversification Opportunities for Capgemini and GBT Technologies

-0.11

Correlation Coefficient

Capgemini  GBT Technologies

Good diversification

The 3 months correlation between Capgemini and GBT is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE ADR and GBT Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GBT Technologies 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 ADR are associated (or correlated) with GBT Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GBT Technologies has no effect on the direction of Capgemini i.e., Capgemini and GBT Technologies go up and down completely randomly.

Pair Corralation between Capgemini and GBT Technologies

Assuming the 90 days horizon Capgemini SE ADR is expected to under-perform the GBT Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Capgemini SE ADR is 135.34 times less risky than GBT Technologies. The pink sheet trades about -0.21 of its potential returns per unit of risk. The GBT Technologies is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  0.01  in GBT Technologies on September 23, 2024 and sell it today you would earn a total of  0.01  from holding GBT Technologies or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Capgemini SE ADR  vs.  GBT Technologies

Capgemini SE ADR

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's primary indicators remain fairly 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.

GBT Technologies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GBT Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile fundamental indicators, GBT Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capgemini and GBT Technologies

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

The idea behind Capgemini SE ADR and GBT Technologies 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..