Correlation Between Topicus and Alithya Group

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

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

Diversification Opportunities for Topicus and Alithya Group

0.5

Correlation Coefficient

Topicus  Alithya Group

Very weak diversification

The 3 months correlation between Topicus and Alithya is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Topicus and Alithya Group inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alithya Group inc and Topicus 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 Topicus are associated (or correlated) with Alithya Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alithya Group inc has no effect on the direction of Topicus i.e., Topicus and Alithya Group go up and down completely randomly.

Pair Corralation between Topicus and Alithya Group

Assuming the 90 days horizon Topicus is expected to generate 1.2 times less return on investment than Alithya Group. But when comparing it to its historical volatility, Topicus is 1.62 times less risky than Alithya Group. It trades about 0.13 of its potential returns per unit of risk. Alithya Group inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  164.00  in Alithya Group inc on December 22, 2024 and sell it today you would earn a total of  31.00  from holding Alithya Group inc or generate 18.9% return on investment over 90 days.

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

Topicus  vs.  Alithya Group inc

Topicus

Risk-Adjusted Performance

OK

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

Alithya Group inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alithya Group inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Alithya Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Topicus and Alithya Group

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

The idea behind Topicus and Alithya Group 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.