Correlation Between Capgemini and Bechtle AG
Can any of the company-specific risk be diversified away by investing in both Capgemini and Bechtle AG 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 Bechtle AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capgemini SE and Bechtle AG, you can compare the effects of market volatilities on Capgemini and Bechtle AG 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 Bechtle AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and Bechtle AG.
Diversification Opportunities for Capgemini and Bechtle AG
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capgemini and Bechtle is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Bechtle AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bechtle AG 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 Bechtle AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bechtle AG has no effect on the direction of Capgemini i.e., Capgemini and Bechtle AG go up and down completely randomly.
Pair Corralation between Capgemini and Bechtle AG
Assuming the 90 days horizon Capgemini SE is expected to under-perform the Bechtle AG. In addition to that, Capgemini is 1.07 times more volatile than Bechtle AG. It trades about -0.21 of its total potential returns per unit of risk. Bechtle AG is currently generating about -0.02 per unit of volatility. If you would invest 3,136 in Bechtle AG on September 1, 2024 and sell it today you would lose (26.00) from holding Bechtle AG or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Capgemini SE vs. Bechtle AG
Performance |
| Timeline |
| Capgemini SE |
| Bechtle AG |
Capgemini and Bechtle AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capgemini and Bechtle AG
The main advantage of trading using opposite Capgemini and Bechtle AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini position performs unexpectedly, Bechtle AG 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 Bechtle AG will offset losses from the drop in Bechtle AG's long position.| Capgemini vs. Air New Zealand | Capgemini vs. ADRIATIC METALS LS 013355 | Capgemini vs. Enter Air SA | Capgemini vs. LION ONE METALS |
| Bechtle AG vs. FUJITSU LTD ADR | Bechtle AG vs. Superior Plus Corp | Bechtle AG vs. NMI Holdings | Bechtle AG vs. Origin Agritech |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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