Correlation Between Automatic Data and CSG Systems
Can any of the company-specific risk be diversified away by investing in both Automatic Data and CSG Systems 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 Automatic Data and CSG Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automatic Data Processing and CSG Systems International, you can compare the effects of market volatilities on Automatic Data and CSG Systems 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 Automatic Data with a short position of CSG Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automatic Data and CSG Systems.
Diversification Opportunities for Automatic Data and CSG Systems
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Automatic and CSG is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and CSG Systems International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSG Systems International and Automatic Data 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 Automatic Data Processing are associated (or correlated) with CSG Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSG Systems International has no effect on the direction of Automatic Data i.e., Automatic Data and CSG Systems go up and down completely randomly.
Pair Corralation between Automatic Data and CSG Systems
Considering the 90-day investment horizon Automatic Data Processing is expected to generate 0.63 times more return on investment than CSG Systems. However, Automatic Data Processing is 1.59 times less risky than CSG Systems. It trades about 0.04 of its potential returns per unit of risk. CSG Systems International is currently generating about 0.01 per unit of risk. If you would invest 24,736 in Automatic Data Processing on August 30, 2024 and sell it today you would earn a total of 6,061 from holding Automatic Data Processing or generate 24.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Automatic Data Processing vs. CSG Systems International
Performance |
| Timeline |
| Automatic Data Processing |
| CSG Systems International |
Automatic Data and CSG Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automatic Data and CSG Systems
The main advantage of trading using opposite Automatic Data and CSG Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data position performs unexpectedly, CSG Systems 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 CSG Systems will offset losses from the drop in CSG Systems' long position.| Automatic Data vs. Robert Half International | Automatic Data vs. Barrett Business Services | Automatic Data vs. ManpowerGroup | Automatic Data vs. Kforce Inc |
| CSG Systems vs. Oneconnect Financial Technology | CSG Systems vs. Global Business Travel | CSG Systems vs. Alight Inc | CSG Systems vs. CS Disco LLC |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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