Correlation Between CGI and Computer Task

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

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

Diversification Opportunities for CGI and Computer Task

-0.63

Correlation Coefficient

CGI  Computer Task

Excellent diversification

The 3 months correlation between CGI and Computer is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding CGI Inc and Computer Task Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Task 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 Computer Task. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Task Group has no effect on the direction of CGI i.e., CGI and Computer Task go up and down completely randomly.

Pair Corralation between CGI and Computer Task

Considering the 90-day investment horizon CGI is expected to generate 1.15 times less return on investment than Computer Task. But when comparing it to its historical volatility, CGI Inc is 1.78 times less risky than Computer Task. It trades about 0.05 of its potential returns per unit of risk. Computer Task Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  872.00  in Computer Task Group on January 31, 2024 and sell it today you would earn a total of  178.00  from holding Computer Task Group or generate 20.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	81.38%
Values	Daily Returns

CGI Inc  vs.  Computer Task Group

CGI Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CGI Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Computer Task Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Computer Task Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Computer Task is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CGI and Computer Task

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

The idea behind CGI Inc and Computer Task 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.