Correlation Between EPAM Systems and CGI
Can any of the company-specific risk be diversified away by investing in both EPAM 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 EPAM Systems and CGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and CGI Inc, you can compare the effects of market volatilities on EPAM 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 EPAM Systems with a short position of CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and CGI.
Diversification Opportunities for EPAM Systems and CGI
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EPAM and CGI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc and EPAM 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 EPAM Systems 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 EPAM Systems i.e., EPAM Systems and CGI go up and down completely randomly.
Pair Corralation between EPAM Systems and CGI
Given the investment horizon of 90 days EPAM Systems is expected to generate 2.04 times less return on investment than CGI. In addition to that, EPAM Systems is 2.18 times more volatile than CGI Inc. It trades about 0.01 of its total potential returns per unit of risk. CGI Inc is currently generating about 0.05 per unit of volatility. If you would invest 7,973 in CGI Inc on January 19, 2024 and sell it today you would earn a total of 2,477 from holding CGI Inc or generate 31.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPAM Systems vs. CGI Inc
Performance |
| Timeline |
| EPAM Systems |
| CGI Inc |
EPAM Systems and CGI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPAM Systems and CGI
The main advantage of trading using opposite EPAM Systems and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM 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.| EPAM Systems vs. International Business Machines | EPAM Systems vs. Aurora Innovation | EPAM Systems vs. ARB IOT Group | EPAM Systems vs. 9F Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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