Correlation Between CGI and Global Engine

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

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

Diversification Opportunities for CGI and Global Engine

-0.52

Correlation Coefficient

CGI  Global Engine

Excellent diversification

The 3 months correlation between CGI and Global is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding CGI Inc and Global Engine Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Engine Group and CGI 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 CGI Inc are associated (or correlated) with Global Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Engine Group has no effect on the direction of CGI i.e., CGI and Global Engine go up and down completely randomly.

Pair Corralation between CGI and Global Engine

Considering the 90-day investment horizon CGI Inc is expected to under-perform the Global Engine. But the stock apears to be less risky and, when comparing its historical volatility, CGI Inc is 4.28 times less risky than Global Engine. The stock trades about -0.04 of its potential returns per unit of risk. The Global Engine Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  204.00  in Global Engine Group on January 23, 2025 and sell it today you would lose (15.00) from holding Global Engine Group or give up 7.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

CGI Inc  vs.  Global Engine Group

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. Despite somewhat strong forward indicators, CGI is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Global Engine Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Engine Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal essential indicators, Global Engine exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CGI and Global Engine

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

The idea behind CGI Inc and Global Engine Group 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.