Correlation Between AAC TECHNOLOGHLDGADR and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both AAC TECHNOLOGHLDGADR and Cisco Systems 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 AAC TECHNOLOGHLDGADR and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAC TECHNOLOGHLDGADR and Cisco Systems, you can compare the effects of market volatilities on AAC TECHNOLOGHLDGADR and Cisco Systems 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 AAC TECHNOLOGHLDGADR with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAC TECHNOLOGHLDGADR and Cisco Systems.
Diversification Opportunities for AAC TECHNOLOGHLDGADR and Cisco Systems
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AAC and Cisco is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AAC TECHNOLOGHLDGADR and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR are associated (or correlated) with Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of AAC TECHNOLOGHLDGADR i.e., AAC TECHNOLOGHLDGADR and Cisco Systems go up and down completely randomly.
Pair Corralation between AAC TECHNOLOGHLDGADR and Cisco Systems
Assuming the 90 days horizon AAC TECHNOLOGHLDGADR is expected to generate 2.68 times more return on investment than Cisco Systems. However, AAC TECHNOLOGHLDGADR is 2.68 times more volatile than Cisco Systems. It trades about 0.1 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.05 per unit of risk. If you would invest 183.00 in AAC TECHNOLOGHLDGADR on September 1, 2024 and sell it today you would earn a total of 223.00 from holding AAC TECHNOLOGHLDGADR or generate 121.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAC TECHNOLOGHLDGADR vs. Cisco Systems
Performance |
| Timeline |
| AAC TECHNOLOGHLDGADR |
| Cisco Systems |
AAC TECHNOLOGHLDGADR and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAC TECHNOLOGHLDGADR and Cisco Systems
The main advantage of trading using opposite AAC TECHNOLOGHLDGADR and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAC TECHNOLOGHLDGADR position performs unexpectedly, Cisco Systems 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 Cisco Systems will offset losses from the drop in Cisco Systems' long position.| AAC TECHNOLOGHLDGADR vs. Motorola Solutions | AAC TECHNOLOGHLDGADR vs. Nokia | AAC TECHNOLOGHLDGADR vs. ZTE Corporation | AAC TECHNOLOGHLDGADR vs. Hewlett Packard Enterprise |
| Cisco Systems vs. Playtech plc | Cisco Systems vs. Electronic Arts | Cisco Systems vs. ANTA SPORTS PRODUCT | Cisco Systems vs. USWE SPORTS AB |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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