Correlation Between Capgemini and Sharp

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

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

Diversification Opportunities for Capgemini and Sharp

0.18

Correlation Coefficient

Capgemini  Sharp

Average diversification

The 3 months correlation between Capgemini and Sharp is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Sharp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sharp 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 Sharp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sharp has no effect on the direction of Capgemini i.e., Capgemini and Sharp go up and down completely randomly.

Pair Corralation between Capgemini and Sharp

Assuming the 90 days horizon Capgemini SE is expected to generate 1.18 times more return on investment than Sharp. However, Capgemini is 1.18 times more volatile than Sharp. It trades about -0.08 of its potential returns per unit of risk. Sharp is currently generating about -0.16 per unit of risk. If you would invest  16,441  in Capgemini SE on May 9, 2025 and sell it today you would lose (2,125) from holding Capgemini SE or give up 12.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Capgemini SE  vs.  Sharp

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 latest weak performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Sharp

Risk-Adjusted Performance

Weakest

Over the last 90 days Sharp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Capgemini and Sharp

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

The idea behind Capgemini SE and Sharp 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.