Correlation Between CSG Systems and AppTech Payments

Can any of the company-specific risk be diversified away by investing in both CSG Systems and AppTech Payments 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 AppTech Payments 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 AppTech Payments Corp, you can compare the effects of market volatilities on CSG Systems and AppTech Payments 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 AppTech Payments. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSG Systems and AppTech Payments.

Diversification Opportunities for CSG Systems and AppTech Payments

0.4

Correlation Coefficient

CSG Systems  AppTech Payments

Very weak diversification

The 3 months correlation between CSG and AppTech is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and AppTech Payments Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AppTech Payments Corp 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 AppTech Payments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AppTech Payments Corp has no effect on the direction of CSG Systems i.e., CSG Systems and AppTech Payments go up and down completely randomly.

Pair Corralation between CSG Systems and AppTech Payments

Given the investment horizon of 90 days CSG Systems is expected to generate 3.69 times less return on investment than AppTech Payments. But when comparing it to its historical volatility, CSG Systems International is 8.11 times less risky than AppTech Payments. It trades about 0.21 of its potential returns per unit of risk. AppTech Payments Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  14.00  in AppTech Payments Corp on December 27, 2024 and sell it today you would earn a total of  4.00  from holding AppTech Payments Corp or generate 28.57% return on investment over 90 days.

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

CSG Systems International  vs.  AppTech Payments Corp

CSG Systems International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSG Systems International are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, CSG Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

AppTech Payments Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AppTech Payments Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, AppTech Payments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSG Systems and AppTech Payments

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

The idea behind CSG Systems International and AppTech Payments Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.