Correlation Between CSG Systems and Box

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

Diversification Opportunities for CSG Systems and Box

0.66

Correlation Coefficient

CSG Systems  Box

Poor diversification

The 3 months correlation between CSG and Box is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and Box Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Box Inc 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 Box. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Box Inc has no effect on the direction of CSG Systems i.e., CSG Systems and Box go up and down completely randomly.

Pair Corralation between CSG Systems and Box

Given the investment horizon of 90 days CSG Systems International is expected to under-perform the Box. But the stock apears to be less risky and, when comparing its historical volatility, CSG Systems International is 1.65 times less risky than Box. The stock trades about -0.27 of its potential returns per unit of risk. The Box Inc is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  3,428  in Box Inc on September 23, 2024 and sell it today you would lose (225.00) from holding Box Inc or give up 6.56% of portfolio value over 90 days.

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

CSG Systems International  vs.  Box Inc

CSG Systems International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSG Systems International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, CSG Systems may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Box Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Box Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Box is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CSG Systems and Box

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

The idea behind CSG Systems International and Box 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.