Correlation Between Capgemini and Applied Materials

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

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

Diversification Opportunities for Capgemini and Applied Materials

-0.22

Correlation Coefficient

Capgemini  Applied Materials

Very good diversification

The 3 months correlation between Capgemini and Applied is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Capgemini i.e., Capgemini and Applied Materials go up and down completely randomly.

Pair Corralation between Capgemini and Applied Materials

Assuming the 90 days horizon Capgemini SE is expected to under-perform the Applied Materials. In addition to that, Capgemini is 1.19 times more volatile than Applied Materials. It trades about -0.02 of its total potential returns per unit of risk. Applied Materials is currently generating about 0.14 per unit of volatility. If you would invest  15,537  in Applied Materials on May 7, 2025 and sell it today you would earn a total of  2,745  from holding Applied Materials or generate 17.67% return on investment over 90 days.

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

Capgemini SE  vs.  Applied Materials

Capgemini SE

Risk-Adjusted Performance

Weakest

Over the last 90 days Capgemini SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Capgemini is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Applied Materials

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Applied Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capgemini and Applied Materials

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

The idea behind Capgemini SE and Applied Materials 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..