Correlation Between CSG Systems and SPS Commerce

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

Diversification Opportunities for CSG Systems and SPS Commerce

0.44

Correlation Coefficient

CSG Systems  SPS Commerce

Very weak diversification

The 3 months correlation between CSG and SPS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and SPS Commerce in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPS Commerce 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 SPS Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPS Commerce has no effect on the direction of CSG Systems i.e., CSG Systems and SPS Commerce go up and down completely randomly.

Pair Corralation between CSG Systems and SPS Commerce

Given the investment horizon of 90 days CSG Systems is expected to generate 1.8 times less return on investment than SPS Commerce. But when comparing it to its historical volatility, CSG Systems International is 1.33 times less risky than SPS Commerce. It trades about 0.06 of its potential returns per unit of risk. SPS Commerce is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12,699  in SPS Commerce on April 21, 2025 and sell it today you would earn a total of  1,199  from holding SPS Commerce or generate 9.44% 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.  SPS Commerce

CSG Systems International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSG Systems International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, CSG Systems is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SPS Commerce

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SPS Commerce are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, SPS Commerce may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CSG Systems and SPS Commerce

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

The idea behind CSG Systems International and SPS Commerce 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.