Correlation Between Cisco Systems and Astellas Pharma
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Astellas Pharma 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 Cisco Systems and Astellas Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Astellas Pharma, you can compare the effects of market volatilities on Cisco Systems and Astellas Pharma 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 Cisco Systems with a short position of Astellas Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Astellas Pharma.
Diversification Opportunities for Cisco Systems and Astellas Pharma
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Astellas is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Astellas Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astellas Pharma and Cisco 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 Cisco Systems are associated (or correlated) with Astellas Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astellas Pharma has no effect on the direction of Cisco Systems i.e., Cisco Systems and Astellas Pharma go up and down completely randomly.
Pair Corralation between Cisco Systems and Astellas Pharma
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.98 times more return on investment than Astellas Pharma. However, Cisco Systems is 1.02 times less risky than Astellas Pharma. It trades about 0.19 of its potential returns per unit of risk. Astellas Pharma is currently generating about -0.09 per unit of risk. If you would invest 5,893 in Cisco Systems on November 8, 2024 and sell it today you would earn a total of 334.00 from holding Cisco Systems or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Astellas Pharma
Performance |
| Timeline |
| Cisco Systems |
| Astellas Pharma |
Cisco Systems and Astellas Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Astellas Pharma
The main advantage of trading using opposite Cisco Systems and Astellas Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Astellas Pharma 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 Astellas Pharma will offset losses from the drop in Astellas Pharma's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Astellas Pharma vs. Bayer AG | Astellas Pharma vs. Daiichi Sankyo | Astellas Pharma vs. AstraZeneca PLC | Astellas Pharma vs. Astellas Pharma |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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