Correlation Between EPAM Systems and CSP

Can any of the company-specific risk be diversified away by investing in both EPAM Systems and CSP 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 EPAM Systems and CSP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EPAM Systems and CSP Inc, you can compare the effects of market volatilities on EPAM Systems and CSP 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 EPAM Systems with a short position of CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and CSP.

Diversification Opportunities for EPAM Systems and CSP

0.73

Correlation Coefficient

EPAM Systems  CSP

Poor diversification

The 3 months correlation between EPAM and CSP is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and EPAM 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 EPAM Systems are associated (or correlated) with CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of EPAM Systems i.e., EPAM Systems and CSP go up and down completely randomly.

Pair Corralation between EPAM Systems and CSP

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the CSP. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 2.03 times less risky than CSP. The stock trades about -0.01 of its potential returns per unit of risk. The CSP Inc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  950.00  in CSP Inc on September 13, 2024 and sell it today you would earn a total of  819.00  from holding CSP Inc or generate 86.21% return on investment over 90 days.

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

EPAM Systems  vs.  CSP Inc

EPAM Systems

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EPAM Systems are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, EPAM Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

CSP Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, CSP demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EPAM Systems and CSP

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

The idea behind EPAM Systems and CSP 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..