Correlation Between Cisco Systems and AMA Group
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and AMA Group 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 AMA Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and AMA Group Limited, you can compare the effects of market volatilities on Cisco Systems and AMA Group 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 AMA Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and AMA Group.
Diversification Opportunities for Cisco Systems and AMA Group
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cisco and AMA is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and AMA Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMA Group Limited 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 AMA Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMA Group Limited has no effect on the direction of Cisco Systems i.e., Cisco Systems and AMA Group go up and down completely randomly.
Pair Corralation between Cisco Systems and AMA Group
Given the investment horizon of 90 days Cisco Systems is expected to generate 4.27 times less return on investment than AMA Group. But when comparing it to its historical volatility, Cisco Systems is 4.23 times less risky than AMA Group. It trades about 0.28 of its potential returns per unit of risk. AMA Group Limited is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 3.75 in AMA Group Limited on September 3, 2024 and sell it today you would earn a total of 1.00 from holding AMA Group Limited or generate 26.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. AMA Group Limited
Performance |
| Timeline |
| Cisco Systems |
| AMA Group Limited |
Cisco Systems and AMA Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and AMA Group
The main advantage of trading using opposite Cisco Systems and AMA Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, AMA Group 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 AMA Group will offset losses from the drop in AMA Group's long position.| Cisco Systems vs. Highway Holdings Limited | Cisco Systems vs. QCR Holdings | Cisco Systems vs. Partner Communications | Cisco Systems vs. Acumen Pharmaceuticals |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |