Correlation Between Nippon Steel and Capgemini
Can any of the company-specific risk be diversified away by investing in both Nippon Steel 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 Nippon Steel and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Steel and Capgemini SE, you can compare the effects of market volatilities on Nippon Steel 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 Nippon Steel with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and Capgemini.
Diversification Opportunities for Nippon Steel and Capgemini
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nippon and Capgemini is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Nippon Steel 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 Nippon Steel 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 Nippon Steel i.e., Nippon Steel and Capgemini go up and down completely randomly.
Pair Corralation between Nippon Steel and Capgemini
Assuming the 90 days trading horizon Nippon Steel is expected to generate 1.83 times more return on investment than Capgemini. However, Nippon Steel is 1.83 times more volatile than Capgemini SE. It trades about 0.04 of its potential returns per unit of risk. Capgemini SE is currently generating about -0.03 per unit of risk. If you would invest 1,900 in Nippon Steel on October 11, 2024 and sell it today you would earn a total of 23.00 from holding Nippon Steel or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Steel vs. Capgemini SE
Performance |
| Timeline |
| Nippon Steel |
| Capgemini SE |
Nippon Steel and Capgemini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Steel and Capgemini
The main advantage of trading using opposite Nippon Steel and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Steel 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.| Nippon Steel vs. Sinopec Shanghai Petrochemical | Nippon Steel vs. TIANDE CHEMICAL | Nippon Steel vs. PTT Global Chemical | Nippon Steel vs. Genertec Universal Medical |
| Capgemini vs. STEEL DYNAMICS | Capgemini vs. Nippon Steel | Capgemini vs. Aegean Airlines SA | Capgemini vs. Insteel Industries |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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