Correlation Between CSG Systems and Microsoft

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

Diversification Opportunities for CSG Systems and Microsoft

0.32

Correlation Coefficient

CSG Systems  Microsoft

Weak diversification

The 3 months correlation between CSG and Microsoft is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of CSG Systems i.e., CSG Systems and Microsoft go up and down completely randomly.

Pair Corralation between CSG Systems and Microsoft

Given the investment horizon of 90 days CSG Systems International is expected to under-perform the Microsoft. In addition to that, CSG Systems is 1.36 times more volatile than Microsoft. It trades about 0.0 of its total potential returns per unit of risk. Microsoft is currently generating about 0.09 per unit of volatility. If you would invest  24,867  in Microsoft on October 23, 2024 and sell it today you would earn a total of  18,036  from holding Microsoft or generate 72.53% return on investment over 90 days.

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

CSG Systems International  vs.  Microsoft

CSG Systems International

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSG Systems International are ranked lower than 8 (%) 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 February 2025.

Microsoft

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Microsoft is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CSG Systems and Microsoft

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

The idea behind CSG Systems International and Microsoft 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 Transaction History module to view history of all your transactions and understand their impact on performance.