Correlation Between Capgemini and Fukuyama Transporting

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

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

Diversification Opportunities for Capgemini and Fukuyama Transporting

0.47

Correlation Coefficient

Capgemini  Fukuyama Transporting

Very weak diversification

The 3 months correlation between Capgemini and Fukuyama is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Fukuyama Transporting Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fukuyama Transporting 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 Fukuyama Transporting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fukuyama Transporting has no effect on the direction of Capgemini i.e., Capgemini and Fukuyama Transporting go up and down completely randomly.

Pair Corralation between Capgemini and Fukuyama Transporting

Assuming the 90 days horizon Capgemini is expected to generate 5.74 times less return on investment than Fukuyama Transporting. But when comparing it to its historical volatility, Capgemini SE is 1.26 times less risky than Fukuyama Transporting. It trades about 0.01 of its potential returns per unit of risk. Fukuyama Transporting Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,674  in Fukuyama Transporting Co on September 24, 2024 and sell it today you would earn a total of  546.00  from holding Fukuyama Transporting Co or generate 32.62% return on investment over 90 days.

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

Capgemini SE  vs.  Fukuyama Transporting Co

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 fragile 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.

Fukuyama Transporting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fukuyama Transporting Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fukuyama Transporting is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Capgemini and Fukuyama Transporting

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

The idea behind Capgemini SE and Fukuyama Transporting Co 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.