Correlation Between Bouygues and Capgemini
Can any of the company-specific risk be diversified away by investing in both Bouygues 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 Bouygues and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and Capgemini SE, you can compare the effects of market volatilities on Bouygues 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 Bouygues with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Capgemini.
Diversification Opportunities for Bouygues and Capgemini
Very weak diversification
The 3 months correlation between Bouygues and Capgemini is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Bouygues 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 Bouygues SA 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 Bouygues i.e., Bouygues and Capgemini go up and down completely randomly.
Pair Corralation between Bouygues and Capgemini
Assuming the 90 days horizon Bouygues SA is expected to generate 0.55 times more return on investment than Capgemini. However, Bouygues SA is 1.81 times less risky than Capgemini. It trades about -0.1 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.31 per unit of risk. If you would invest 2,955 in Bouygues SA on August 24, 2024 and sell it today you would lose (90.00) from holding Bouygues SA or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouygues SA vs. Capgemini SE
Performance |
| Timeline |
| Bouygues SA |
| Capgemini SE |
Bouygues and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Capgemini
The main advantage of trading using opposite Bouygues and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues 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.| Bouygues vs. Vinci SA | Bouygues vs. Compagnie de Saint Gobain | Bouygues vs. Orange SA | Bouygues vs. Veolia Environnement VE |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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