Correlation Between CGI and CCL Industries

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

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

Diversification Opportunities for CGI and CCL Industries

-0.22

Correlation Coefficient

CGI  CCL Industries

Very good diversification

The 3 months correlation between CGI and CCL is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding CGI Inc and CCL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCL Industries 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 CCL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCL Industries has no effect on the direction of CGI i.e., CGI and CCL Industries go up and down completely randomly.

Pair Corralation between CGI and CCL Industries

Assuming the 90 days trading horizon CGI Inc is expected to under-perform the CCL Industries. But the stock apears to be less risky and, when comparing its historical volatility, CGI Inc is 1.38 times less risky than CCL Industries. The stock trades about -0.1 of its potential returns per unit of risk. The CCL Industries is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,916  in CCL Industries on April 24, 2025 and sell it today you would earn a total of  1,047  from holding CCL Industries or generate 15.14% return on investment over 90 days.

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

CGI Inc  vs.  CCL Industries

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 comparatively stable basic indicators, CGI is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

CCL Industries

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CCL Industries are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, CCL Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CGI and CCL Industries

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

The idea behind CGI Inc and CCL Industries 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.