Correlation Between Kuboo and CGI
Can any of the company-specific risk be diversified away by investing in both Kuboo 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 Kuboo and CGI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kuboo Inc and CGI Inc, you can compare the effects of market volatilities on Kuboo 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 Kuboo with a short position of CGI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kuboo and CGI.
Diversification Opportunities for Kuboo and CGI
Significant diversification
The 3 months correlation between Kuboo and CGI is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Kuboo Inc and CGI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CGI Inc and Kuboo 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 Kuboo Inc 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 Kuboo i.e., Kuboo and CGI go up and down completely randomly.
Pair Corralation between Kuboo and CGI
Given the investment horizon of 90 days Kuboo Inc is expected to generate 8.42 times more return on investment than CGI. However, Kuboo is 8.42 times more volatile than CGI Inc. It trades about 0.01 of its potential returns per unit of risk. CGI Inc is currently generating about 0.05 per unit of risk. If you would invest 2.03 in Kuboo Inc on January 25, 2024 and sell it today you would lose (1.83) from holding Kuboo Inc or give up 90.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kuboo Inc vs. CGI Inc
Performance |
| Timeline |
| Kuboo Inc |
| CGI Inc |
Kuboo and CGI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kuboo and CGI
The main advantage of trading using opposite Kuboo and CGI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kuboo 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 Kuboo Inc 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.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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