Correlation Between CSG Systems and Automatic Data
Can any of the company-specific risk be diversified away by investing in both CSG Systems and Automatic Data 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 CSG Systems and Automatic Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSG Systems International and Automatic Data Processing, you can compare the effects of market volatilities on CSG Systems and Automatic Data 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 CSG Systems with a short position of Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSG Systems and Automatic Data.
Diversification Opportunities for CSG Systems and Automatic Data
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CSG and Automatic is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing and CSG Systems 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 CSG Systems International are associated (or correlated) with Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of CSG Systems i.e., CSG Systems and Automatic Data go up and down completely randomly.
Pair Corralation between CSG Systems and Automatic Data
Given the investment horizon of 90 days CSG Systems International is expected to generate 1.86 times more return on investment than Automatic Data. However, CSG Systems is 1.86 times more volatile than Automatic Data Processing. It trades about 0.28 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.17 per unit of risk. If you would invest 4,729 in CSG Systems International on August 31, 2024 and sell it today you would earn a total of 730.00 from holding CSG Systems International or generate 15.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSG Systems International vs. Automatic Data Processing
Performance |
| Timeline |
| CSG Systems International |
| Automatic Data Processing |
CSG Systems and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSG Systems and Automatic Data
The main advantage of trading using opposite CSG Systems and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSG Systems position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| CSG Systems vs. NetScout Systems | CSG Systems vs. Consensus Cloud Solutions | CSG Systems vs. Secureworks Corp | CSG Systems vs. Evertec |
| Automatic Data vs. Robert Half International | Automatic Data vs. Barrett Business Services | Automatic Data vs. ManpowerGroup | Automatic Data vs. Kforce Inc |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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