Correlation Between CGI and S A P

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

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

Diversification Opportunities for CGI and S A P

-0.7

Correlation Coefficient

CGI  S A P

Excellent diversification

The 3 months correlation between CGI and SAP is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding CGI Inc and Saputo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saputo Inc 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saputo Inc has no effect on the direction of CGI i.e., CGI and S A P go up and down completely randomly.

Pair Corralation between CGI and S A P

Assuming the 90 days trading horizon CGI Inc is expected to under-perform the S A P. But the stock apears to be less risky and, when comparing its historical volatility, CGI Inc is 1.74 times less risky than S A P. The stock trades about -0.36 of its potential returns per unit of risk. The Saputo Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,689  in Saputo Inc on April 21, 2025 and sell it today you would earn a total of  160.00  from holding Saputo Inc or generate 5.95% return on investment over 90 days.

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

CGI Inc  vs.  Saputo Inc

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.

Saputo Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saputo Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, S A P may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CGI and S A P

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

The idea behind CGI Inc and Saputo 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.