Correlation Between CCL Industries and CGI

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

By analyzing existing cross correlation between CCL Industries and CGI Inc, you can compare the effects of market volatilities on CCL Industries and CGI 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 CCL Industries with a short position of CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CCL Industries and CGI.

Diversification Opportunities for CCL Industries and CGI

-0.51

Correlation Coefficient

CCL Industries  CGI

Excellent diversification

The 3 months correlation between CCL and CGI is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CCL Industries and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc and CCL Industries 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 CCL Industries are associated (or correlated) with CGI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CGI Inc has no effect on the direction of CCL Industries i.e., CCL Industries and CGI go up and down completely randomly.

Pair Corralation between CCL Industries and CGI

Assuming the 90 days trading horizon CCL Industries is expected to under-perform the CGI. In addition to that, CCL Industries is 1.08 times more volatile than CGI Inc. It trades about -0.06 of its total potential returns per unit of risk. CGI Inc is currently generating about 0.01 per unit of volatility. If you would invest  15,848  in CGI Inc on November 29, 2024 and sell it today you would earn a total of  81.00  from holding CGI Inc or generate 0.51% return on investment over 90 days.

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

CCL Industries  vs.  CGI Inc

CCL Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days CCL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, CCL Industries is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

CGI Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CGI Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CGI is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CCL Industries and CGI

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

The idea behind CCL Industries and CGI Inc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..