Correlation Between Alibaba Group and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both Alibaba Group 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 Alibaba Group and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Cisco Systems, you can compare the effects of market volatilities on Alibaba Group 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 Alibaba Group with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Cisco Systems.
Diversification Opportunities for Alibaba Group and Cisco Systems
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alibaba and Cisco is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and Cisco Systems go up and down completely randomly.
Pair Corralation between Alibaba Group and Cisco Systems
Given the investment horizon of 90 days Alibaba Group is expected to generate 6.17 times less return on investment than Cisco Systems. In addition to that, Alibaba Group is 2.34 times more volatile than Cisco Systems. It trades about 0.02 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.26 per unit of volatility. If you would invest 5,858 in Cisco Systems on October 24, 2024 and sell it today you would earn a total of 165.00 from holding Cisco Systems or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Cisco Systems
Performance |
| Timeline |
| Alibaba Group Holding |
| Cisco Systems |
Alibaba Group and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Cisco Systems
The main advantage of trading using opposite Alibaba Group and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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.| Alibaba Group vs. PDD Holdings | Alibaba Group vs. MercadoLibre | Alibaba Group vs. JD Inc Adr | Alibaba Group vs. Sea |
| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |