Correlation Between Capgemini and Direct Communication
Can any of the company-specific risk be diversified away by investing in both Capgemini and Direct Communication 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 Direct Communication into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capgemini SE ADR and Direct Communication Solutions, you can compare the effects of market volatilities on Capgemini and Direct Communication 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 Direct Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and Direct Communication.
Diversification Opportunities for Capgemini and Direct Communication
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Capgemini and Direct is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE ADR and Direct Communication Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Direct Communication 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 ADR are associated (or correlated) with Direct Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Direct Communication has no effect on the direction of Capgemini i.e., Capgemini and Direct Communication go up and down completely randomly.
Pair Corralation between Capgemini and Direct Communication
Assuming the 90 days horizon Capgemini SE ADR is expected to under-perform the Direct Communication. But the pink sheet apears to be less risky and, when comparing its historical volatility, Capgemini SE ADR is 19.39 times less risky than Direct Communication. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Direct Communication Solutions is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 111.00 in Direct Communication Solutions on October 25, 2024 and sell it today you would earn a total of 290.00 from holding Direct Communication Solutions or generate 261.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capgemini SE ADR vs. Direct Communication Solutions
Performance |
| Timeline |
| Capgemini SE ADR |
| Direct Communication |
Capgemini and Direct Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capgemini and Direct Communication
The main advantage of trading using opposite Capgemini and Direct Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini position performs unexpectedly, Direct Communication 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 Direct Communication will offset losses from the drop in Direct Communication's long position.| Capgemini vs. Soluna Holdings Preferred | Capgemini vs. Crypto Co | Capgemini vs. ASGN Inc | Capgemini vs. Soluna Holdings |
| Direct Communication vs. Crypto Co | Direct Communication vs. Datametrex AI Limited | Direct Communication vs. Atos SE | Direct Communication vs. Deveron Corp |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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