Correlation Between Formula Systems and CSP
Can any of the company-specific risk be diversified away by investing in both Formula 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 Formula Systems and CSP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formula Systems 1985 and CSP Inc, you can compare the effects of market volatilities on Formula 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 Formula Systems with a short position of CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formula Systems and CSP.
Diversification Opportunities for Formula Systems and CSP
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Formula and CSP is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Formula Systems 1985 and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and Formula 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 Formula Systems 1985 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 Formula Systems i.e., Formula Systems and CSP go up and down completely randomly.
Pair Corralation between Formula Systems and CSP
Assuming the 90 days horizon Formula Systems 1985 is expected to generate 1.63 times more return on investment than CSP. However, Formula Systems is 1.63 times more volatile than CSP Inc. It trades about 0.25 of its potential returns per unit of risk. CSP Inc is currently generating about 0.19 per unit of risk. If you would invest 11,006 in Formula Systems 1985 on May 27, 2025 and sell it today you would earn a total of 1,865 from holding Formula Systems 1985 or generate 16.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 61.9% |
| Values | Daily Returns |
Formula Systems 1985 vs. CSP Inc
Performance |
| Timeline |
| Formula Systems 1985 |
| CSP Inc |
Formula Systems and CSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formula Systems and CSP
The main advantage of trading using opposite Formula Systems and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formula 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.| Formula Systems vs. The Hackett Group | Formula Systems vs. CSP Inc | Formula Systems vs. Nayax | Formula Systems vs. Magic Software Enterprises |
Check out your portfolio center.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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