Correlation Between CSG Systems and Synchronoss Technologies

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

Diversification Opportunities for CSG Systems and Synchronoss Technologies

0.56

Correlation Coefficient

CSG Systems  Synchronoss Technologies

Very weak diversification

The 3 months correlation between CSG and Synchronoss is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and Synchronoss Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synchronoss Technologies 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 Synchronoss Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synchronoss Technologies has no effect on the direction of CSG Systems i.e., CSG Systems and Synchronoss Technologies go up and down completely randomly.

Pair Corralation between CSG Systems and Synchronoss Technologies

Given the investment horizon of 90 days CSG Systems International is expected to generate 0.42 times more return on investment than Synchronoss Technologies. However, CSG Systems International is 2.4 times less risky than Synchronoss Technologies. It trades about 0.23 of its potential returns per unit of risk. Synchronoss Technologies is currently generating about 0.0 per unit of risk. If you would invest  5,450  in CSG Systems International on November 28, 2024 and sell it today you would earn a total of  1,223  from holding CSG Systems International or generate 22.44% 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.  Synchronoss Technologies

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 18 (%) 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.

Synchronoss Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synchronoss Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, Synchronoss Technologies is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CSG Systems and Synchronoss Technologies

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

The idea behind CSG Systems International and Synchronoss Technologies 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.