Correlation Between Capgemini and Eurofins Scientific

Can any of the company-specific risk be diversified away by investing in both Capgemini and Eurofins Scientific 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 Eurofins Scientific into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capgemini SE and Eurofins Scientific SE, you can compare the effects of market volatilities on Capgemini and Eurofins Scientific 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 Eurofins Scientific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and Eurofins Scientific.

Diversification Opportunities for Capgemini and Eurofins Scientific

-0.53

Correlation Coefficient

Capgemini  Eurofins Scientific

Excellent diversification

The 3 months correlation between Capgemini and Eurofins is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Eurofins Scientific SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurofins Scientific 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 Eurofins Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurofins Scientific has no effect on the direction of Capgemini i.e., Capgemini and Eurofins Scientific go up and down completely randomly.

Pair Corralation between Capgemini and Eurofins Scientific

Assuming the 90 days trading horizon Capgemini SE is expected to generate 0.89 times more return on investment than Eurofins Scientific. However, Capgemini SE is 1.12 times less risky than Eurofins Scientific. It trades about -0.02 of its potential returns per unit of risk. Eurofins Scientific SE is currently generating about -0.04 per unit of risk. If you would invest  19,603  in Capgemini SE on March 2, 2024 and sell it today you would lose (173.00) from holding Capgemini SE or give up 0.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Capgemini SE  vs.  Eurofins Scientific SE

Capgemini SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capgemini SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Eurofins Scientific

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eurofins Scientific SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Eurofins Scientific is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capgemini and Eurofins Scientific

The main advantage of trading using opposite Capgemini and Eurofins Scientific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini position performs unexpectedly, Eurofins Scientific 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 Eurofins Scientific will offset losses from the drop in Eurofins Scientific's long position.

The idea behind Capgemini SE and Eurofins Scientific SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.