Correlation Between Descartes Systems and CGI

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

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

Diversification Opportunities for Descartes Systems and CGI

0.0

Correlation Coefficient

Descartes Systems  CGI

Pay attention - limited upside

The 3 months correlation between Descartes and CGI is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Descartes Systems Group and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc and Descartes Systems 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 Descartes Systems Group 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 Descartes Systems i.e., Descartes Systems and CGI go up and down completely randomly.

Pair Corralation between Descartes Systems and CGI

If you would invest (100.00) in Descartes Systems Group on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Descartes Systems Group or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Descartes Systems Group  vs.  CGI Inc

Descartes Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Descartes Systems Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Descartes Systems is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

CGI Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CGI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Descartes Systems and CGI

The main advantage of trading using opposite Descartes Systems and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Descartes Systems 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 Descartes Systems Group 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.

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 the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.