Correlation Between Air New and Capgemini
Can any of the company-specific risk be diversified away by investing in both Air New 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 Air New and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air New Zealand and Capgemini SE, you can compare the effects of market volatilities on Air New 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 Air New with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air New and Capgemini.
Diversification Opportunities for Air New and Capgemini
Good diversification
The 3 months correlation between Air and Capgemini is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Air New Zealand and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Air New 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 Air New Zealand 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 has no effect on the direction of Air New i.e., Air New and Capgemini go up and down completely randomly.
Pair Corralation between Air New and Capgemini
Assuming the 90 days trading horizon Air New Zealand is expected to generate 1.11 times more return on investment than Capgemini. However, Air New is 1.11 times more volatile than Capgemini SE. It trades about 0.18 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.21 per unit of risk. If you would invest 29.00 in Air New Zealand on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Air New Zealand or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air New Zealand vs. Capgemini SE
Performance |
| Timeline |
| Air New Zealand |
| Capgemini SE |
Air New and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air New and Capgemini
The main advantage of trading using opposite Air New and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air New 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.| Air New vs. SIVERS SEMICONDUCTORS AB | Air New vs. Darden Restaurants | Air New vs. Reliance Steel Aluminum | Air New vs. Q2M Managementberatung AG |
| Capgemini vs. Air New Zealand | Capgemini vs. ADRIATIC METALS LS 013355 | Capgemini vs. Enter Air SA | Capgemini vs. LION ONE METALS |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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