Correlation Between CSG Systems and XBP Europe

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

Diversification Opportunities for CSG Systems and XBP Europe

0.29

Correlation Coefficient

CSG Systems  XBP Europe

Modest diversification

The 3 months correlation between CSG and XBP is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings 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 XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of CSG Systems i.e., CSG Systems and XBP Europe go up and down completely randomly.

Pair Corralation between CSG Systems and XBP Europe

Given the investment horizon of 90 days CSG Systems is expected to generate 106.78 times less return on investment than XBP Europe. But when comparing it to its historical volatility, CSG Systems International is 15.69 times less risky than XBP Europe. It trades about 0.02 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8.00  in XBP Europe Holdings on October 1, 2024 and sell it today you would lose (4.00) from holding XBP Europe Holdings or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	67.82%
Values	Daily Returns

CSG Systems International  vs.  XBP Europe Holdings

CSG Systems International

Risk-Adjusted Performance

5 of 100

Insignificant

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 weak technical and fundamental indicators, CSG Systems may actually be approaching a critical reversion point that can send shares even higher in January 2025.

XBP Europe Holdings

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in XBP Europe Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, XBP Europe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSG Systems and XBP Europe

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

The idea behind CSG Systems International and XBP Europe Holdings 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.