Correlation Between Wipro Limited and Capgemini

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

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

Diversification Opportunities for Wipro Limited and Capgemini

-0.76

Correlation Coefficient

Wipro Limited  Capgemini

Pay attention - limited upside

The 3 months correlation between Wipro and Capgemini is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wipro Limited ADR 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 Wipro Limited 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 Wipro Limited ADR 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 Wipro Limited i.e., Wipro Limited and Capgemini go up and down completely randomly.

Pair Corralation between Wipro Limited and Capgemini

Considering the 90-day investment horizon Wipro Limited ADR is expected to generate 1.22 times more return on investment than Capgemini. However, Wipro Limited is 1.22 times more volatile than Capgemini SE ADR. It trades about 0.12 of its potential returns per unit of risk. Capgemini SE ADR is currently generating about -0.12 per unit of risk. If you would invest  533.00  in Wipro Limited ADR on September 3, 2024 and sell it today you would earn a total of  166.00  from holding Wipro Limited ADR or generate 31.14% return on investment over 90 days.

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

Wipro Limited ADR  vs.  Capgemini SE ADR

Wipro Limited ADR

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wipro Limited ADR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward indicators, Wipro Limited may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

Pair Trading with Wipro Limited and Capgemini

The main advantage of trading using opposite Wipro Limited and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wipro Limited 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 Wipro Limited ADR 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.