Correlation Between CSG Systems and Rapid7

Can any of the company-specific risk be diversified away by investing in both CSG Systems and Rapid7 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 Rapid7 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 Rapid7 Inc, you can compare the effects of market volatilities on CSG Systems and Rapid7 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 Rapid7. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSG Systems and Rapid7.

Diversification Opportunities for CSG Systems and Rapid7

-0.66

Correlation Coefficient

CSG Systems  Rapid7

Excellent diversification

The 3 months correlation between CSG and Rapid7 is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and Rapid7 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapid7 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 Rapid7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapid7 Inc has no effect on the direction of CSG Systems i.e., CSG Systems and Rapid7 go up and down completely randomly.

Pair Corralation between CSG Systems and Rapid7

Given the investment horizon of 90 days CSG Systems International is expected to generate 0.93 times more return on investment than Rapid7. However, CSG Systems International is 1.07 times less risky than Rapid7. It trades about 0.48 of its potential returns per unit of risk. Rapid7 Inc is currently generating about -0.54 per unit of risk. If you would invest  5,569  in CSG Systems International on November 28, 2024 and sell it today you would earn a total of  1,109  from holding CSG Systems International or generate 19.91% return on investment over 90 days.

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

CSG Systems International  vs.  Rapid7 Inc

CSG Systems International

Risk-Adjusted Performance

Solid

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.

Rapid7 Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rapid7 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CSG Systems and Rapid7

The main advantage of trading using opposite CSG Systems and Rapid7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSG Systems position performs unexpectedly, Rapid7 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 Rapid7 will offset losses from the drop in Rapid7's long position.

The idea behind CSG Systems International and Rapid7 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.