Correlation Between Cap Gemini and Datasea

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

Diversification Opportunities for Cap Gemini and Datasea

-0.54
  Correlation Coefficient

Excellent diversification

The 3 months correlation between CGEMY and Datasea is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cap Gemini Sa and Datasea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datasea and Cap Gemini 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 Cap Gemini Sa are associated (or correlated) with Datasea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datasea has no effect on the direction of Cap Gemini i.e., Cap Gemini and Datasea go up and down completely randomly.

Pair Corralation between Cap Gemini and Datasea

Assuming the 90 days horizon Cap Gemini Sa is expected to generate 0.33 times more return on investment than Datasea. However, Cap Gemini Sa is 2.99 times less risky than Datasea. It trades about 0.03 of its potential returns per unit of risk. Datasea is currently generating about 0.0 per unit of risk. If you would invest  3,205  in Cap Gemini Sa on August 28, 2022 and sell it today you would earn a total of  530.00  from holding Cap Gemini Sa or generate 16.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Cap Gemini Sa  vs.  Datasea

 Performance (%) 
       Timeline  
Cap Gemini Sa 
CGEMY Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Cap Gemini Sa are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Cap Gemini may actually be approaching a critical reversion point that can send shares even higher in December 2022.

CGEMY Price Channel

Datasea 
Datasea Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Datasea are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Datasea reported solid returns over the last few months and may actually be approaching a breakup point.

Datasea Price Channel

Cap Gemini and Datasea Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cap Gemini and Datasea

The main advantage of trading using opposite Cap Gemini and Datasea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cap Gemini position performs unexpectedly, Datasea 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 Datasea will offset losses from the drop in Datasea's long position.
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The idea behind Cap Gemini Sa and Datasea 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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