Correlation Between CGI and Canfor
Can any of the company-specific risk be diversified away by investing in both CGI and Canfor 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 Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGI Inc and Canfor, you can compare the effects of market volatilities on CGI and Canfor 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 Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGI and Canfor.
Diversification Opportunities for CGI and Canfor
Very weak diversification
The 3 months correlation between CGI and Canfor is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding CGI Inc and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor 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 Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of CGI i.e., CGI and Canfor go up and down completely randomly.
Pair Corralation between CGI and Canfor
Assuming the 90 days trading horizon CGI Inc is expected to generate 0.48 times more return on investment than Canfor. However, CGI Inc is 2.08 times less risky than Canfor. It trades about 0.04 of its potential returns per unit of risk. Canfor is currently generating about -0.01 per unit of risk. If you would invest 13,935 in CGI Inc on September 2, 2024 and sell it today you would earn a total of 1,913 from holding CGI Inc or generate 13.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CGI Inc vs. Canfor
Performance |
| Timeline |
| CGI Inc |
| Canfor |
CGI and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGI and Canfor
The main advantage of trading using opposite CGI and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGI position performs unexpectedly, Canfor 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 Canfor will offset losses from the drop in Canfor's long position.The idea behind CGI Inc and Canfor 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.| Canfor vs. Ramp Metals | Canfor vs. Arbor Metals Corp | Canfor vs. Information Services | Canfor vs. Northstar Clean Technologies |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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