Correlation Between Capgemini and Atos SE

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

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

Diversification Opportunities for Capgemini and Atos SE

0.6

Correlation Coefficient

Capgemini  Atos SE

Poor diversification

The 3 months correlation between Capgemini and Atos is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Atos SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atos SE 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 Atos SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atos SE has no effect on the direction of Capgemini i.e., Capgemini and Atos SE go up and down completely randomly.

Pair Corralation between Capgemini and Atos SE

Assuming the 90 days horizon Capgemini is expected to generate 94.01 times less return on investment than Atos SE. But when comparing it to its historical volatility, Capgemini SE is 28.77 times less risky than Atos SE. It trades about 0.01 of its potential returns per unit of risk. Atos SE is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,074  in Atos SE on September 22, 2024 and sell it today you would lose (1,074) from holding Atos SE or give up 99.98% 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.  Atos SE

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 uncertain 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.

Atos SE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Atos SE are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Atos SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capgemini and Atos SE

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

The idea behind Capgemini SE and Atos 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.