Correlation Between Castellum and CGI

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

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

Diversification Opportunities for Castellum and CGI

0.04

Correlation Coefficient

Castellum  CGI

Significant diversification

The 3 months correlation between Castellum and CGI is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Castellum and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc and Castellum 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 Castellum 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 Castellum i.e., Castellum and CGI go up and down completely randomly.

Pair Corralation between Castellum and CGI

Considering the 90-day investment horizon Castellum is expected to generate 4.97 times more return on investment than CGI. However, Castellum is 4.97 times more volatile than CGI Inc. It trades about 0.07 of its potential returns per unit of risk. CGI Inc is currently generating about 0.01 per unit of risk. If you would invest  17.00  in Castellum on September 1, 2024 and sell it today you would earn a total of  3.00  from holding Castellum or generate 17.65% return on investment over 90 days.

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

Castellum  vs.  CGI Inc

Castellum

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

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 somewhat strong forward indicators, CGI is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Castellum and CGI

The main advantage of trading using opposite Castellum and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castellum 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 Castellum 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.