Correlation Between Apptech Corp and Capgemini

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Can any of the company-specific risk be diversified away by investing in both Apptech Corp 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 Apptech Corp and Capgemini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apptech Corp and Capgemini SE, you can compare the effects of market volatilities on Apptech Corp 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 Apptech Corp with a short position of Capgemini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apptech Corp and Capgemini.

Diversification Opportunities for Apptech Corp and Capgemini

0.24
  Correlation Coefficient

Modest diversification

The 3 months correlation between Apptech and Capgemini is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Apptech Corp and Capgemini SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capgemini SE and Apptech Corp 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 Apptech Corp 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 Apptech Corp i.e., Apptech Corp and Capgemini go up and down completely randomly.

Pair Corralation between Apptech Corp and Capgemini

Given the investment horizon of 90 days Apptech Corp is expected to generate 49.99 times more return on investment than Capgemini. However, Apptech Corp is 49.99 times more volatile than Capgemini SE. It trades about 0.13 of its potential returns per unit of risk. Capgemini SE is currently generating about 0.04 per unit of risk. If you would invest  761.00  in Apptech Corp on September 4, 2022 and sell it today you would lose (663.00)  from holding Apptech Corp or give up 87.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.8%
ValuesDaily Returns

Apptech Corp  vs.  Capgemini SE

 Performance (%) 
       Timeline  
Apptech Corp 
Apptech Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apptech Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Apptech Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Apptech Price Channel

Capgemini SE 
Capgemini Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Capgemini SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal primary indicators, Capgemini exhibited solid returns over the last few months and may actually be approaching a breakup point.

Capgemini Price Channel

Apptech Corp and Capgemini Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Apptech Corp and Capgemini

The main advantage of trading using opposite Apptech Corp and Capgemini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apptech Corp 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.
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The idea behind Apptech Corp and Capgemini 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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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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