Correlation Between Japan Medical and Capgemini
Can any of the company-specific risk be diversified away by investing in both Japan Medical 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 Japan Medical and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Medical Dynamic and Capgemini SE, you can compare the effects of market volatilities on Japan Medical 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 Japan Medical with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Medical and Capgemini.
Diversification Opportunities for Japan Medical and Capgemini
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Japan and Capgemini is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Japan Medical Dynamic and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Japan Medical 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 Japan Medical Dynamic 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 Japan Medical i.e., Japan Medical and Capgemini go up and down completely randomly.
Pair Corralation between Japan Medical and Capgemini
Assuming the 90 days horizon Japan Medical Dynamic is expected to generate 0.79 times more return on investment than Capgemini. However, Japan Medical Dynamic is 1.27 times less risky than Capgemini. It trades about -0.21 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.3 per unit of risk. If you would invest 394.00 in Japan Medical Dynamic on August 28, 2024 and sell it today you would lose (28.00) from holding Japan Medical Dynamic or give up 7.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Medical Dynamic vs. Capgemini SE
Performance |
| Timeline |
| Japan Medical Dynamic |
| Capgemini SE |
Japan Medical and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Medical and Capgemini
The main advantage of trading using opposite Japan Medical and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Medical 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.| Japan Medical vs. SIDETRADE EO 1 | Japan Medical vs. EEDUCATION ALBERT AB | Japan Medical vs. TRADEGATE | Japan Medical vs. Geely Automobile Holdings |
| Capgemini vs. Cognizant Technology Solutions | Capgemini vs. Superior Plus Corp | Capgemini vs. NMI Holdings | Capgemini 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 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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