Correlation Between CSG Systems and Pagaya Technologies

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

Diversification Opportunities for CSG Systems and Pagaya Technologies

0.21

Correlation Coefficient

CSG Systems  Pagaya Technologies

Modest diversification

The 3 months correlation between CSG and Pagaya is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and Pagaya Technologies Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya 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 Pagaya Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagaya Technologies has no effect on the direction of CSG Systems i.e., CSG Systems and Pagaya Technologies go up and down completely randomly.

Pair Corralation between CSG Systems and Pagaya Technologies

Given the investment horizon of 90 days CSG Systems International is expected to under-perform the Pagaya Technologies. In addition to that, CSG Systems is 134.71 times more volatile than Pagaya Technologies Ltd. It trades about -0.28 of its total potential returns per unit of risk. Pagaya Technologies Ltd is currently generating about 0.22 per unit of volatility. If you would invest  23.00  in Pagaya Technologies Ltd on October 1, 2024 and sell it today you would earn a total of  0.01  from holding Pagaya Technologies Ltd or generate 0.04% 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.  Pagaya Technologies Ltd

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

Pagaya Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pagaya Technologies Ltd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Pagaya Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSG Systems and Pagaya Technologies

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

The idea behind CSG Systems International and Pagaya Technologies Ltd 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.