Correlation Between Topicus and CGI

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

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

Diversification Opportunities for Topicus and CGI

-0.59

Correlation Coefficient

Topicus  CGI

Excellent diversification

The 3 months correlation between Topicus and CGI is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Topicus and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI 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 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 Topicus i.e., Topicus and CGI go up and down completely randomly.

Pair Corralation between Topicus and CGI

Assuming the 90 days horizon Topicus is expected to generate 2.14 times more return on investment than CGI. However, Topicus is 2.14 times more volatile than CGI Inc. It trades about 0.12 of its potential returns per unit of risk. CGI Inc is currently generating about -0.15 per unit of risk. If you would invest  16,100  in Topicus on May 6, 2025 and sell it today you would earn a total of  2,415  from holding Topicus or generate 15.0% return on investment over 90 days.

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

Topicus  vs.  CGI Inc

Topicus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Topicus are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Topicus showed solid returns over the last few months and may actually be approaching a breakup point.

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 Topicus and CGI

The main advantage of trading using opposite Topicus and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Topicus 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 Topicus 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..