Correlation Between Capgemini and Bouygues
Can any of the company-specific risk be diversified away by investing in both Capgemini and Bouygues 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 Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capgemini SE and Bouygues SA, you can compare the effects of market volatilities on Capgemini and Bouygues 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 Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and Bouygues.
Diversification Opportunities for Capgemini and Bouygues
Poor diversification
The 3 months correlation between Capgemini and Bouygues is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA 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 Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of Capgemini i.e., Capgemini and Bouygues go up and down completely randomly.
Pair Corralation between Capgemini and Bouygues
Assuming the 90 days trading horizon Capgemini SE is expected to under-perform the Bouygues. In addition to that, Capgemini is 1.3 times more volatile than Bouygues SA. It trades about -0.01 of its total potential returns per unit of risk. Bouygues SA is currently generating about 0.02 per unit of volatility. If you would invest 2,758 in Bouygues SA on October 25, 2024 and sell it today you would earn a total of 298.00 from holding Bouygues SA or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Capgemini SE vs. Bouygues SA
Performance |
| Timeline |
| Capgemini SE |
| Bouygues SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Capgemini and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capgemini and Bouygues
The main advantage of trading using opposite Capgemini and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini position performs unexpectedly, Bouygues 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 Bouygues will offset losses from the drop in Bouygues' long position.The idea behind Capgemini SE and Bouygues SA 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.| Bouygues vs. Vinci SA | Bouygues vs. Orange SA | Bouygues vs. Veolia Environnement VE | Bouygues vs. Carrefour SA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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