Correlation Between CSG Systems and Informatica

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

Diversification Opportunities for CSG Systems and Informatica

0.11

Correlation Coefficient

CSG Systems  Informatica

Average diversification

The 3 months correlation between CSG and Informatica is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and Informatica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica 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 Informatica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica has no effect on the direction of CSG Systems i.e., CSG Systems and Informatica go up and down completely randomly.

Pair Corralation between CSG Systems and Informatica

Given the investment horizon of 90 days CSG Systems is expected to generate 1.03 times less return on investment than Informatica. But when comparing it to its historical volatility, CSG Systems International is 1.28 times less risky than Informatica. It trades about 0.07 of its potential returns per unit of risk. Informatica is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,528  in Informatica on September 28, 2024 and sell it today you would earn a total of  170.00  from holding Informatica or generate 6.72% return on investment over 90 days.

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

CSG Systems International  vs.  Informatica

CSG Systems International

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSG Systems International are ranked lower than 5 (%) 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.

Informatica

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Informatica are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Informatica may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CSG Systems and Informatica

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

The idea behind CSG Systems International and Informatica 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.