Correlation Between Cisco Systems and Amkor Technology
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Amkor Technology 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 Amkor Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Amkor Technology, you can compare the effects of market volatilities on Cisco Systems and Amkor Technology 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 Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Amkor Technology.
Diversification Opportunities for Cisco Systems and Amkor Technology
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Amkor is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology 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 Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of Cisco Systems i.e., Cisco Systems and Amkor Technology go up and down completely randomly.
Pair Corralation between Cisco Systems and Amkor Technology
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.44 times more return on investment than Amkor Technology. However, Cisco Systems is 2.29 times less risky than Amkor Technology. It trades about 0.06 of its potential returns per unit of risk. Amkor Technology is currently generating about 0.01 per unit of risk. If you would invest 4,446 in Cisco Systems on November 1, 2024 and sell it today you would earn a total of 1,509 from holding Cisco Systems or generate 33.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. Amkor Technology
Performance |
| Timeline |
| Cisco Systems |
| Amkor Technology |
Cisco Systems and Amkor Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Amkor Technology
The main advantage of trading using opposite Cisco Systems and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Amkor Technology 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 Amkor Technology will offset losses from the drop in Amkor Technology's long position.| Cisco Systems vs. Comtech Telecommunications Corp | Cisco Systems vs. Silicom | Cisco Systems vs. Knowles Cor | Cisco Systems vs. Mynaric AG ADR |
| Amkor Technology vs. Diodes Incorporated | Amkor Technology vs. Daqo New Energy | Amkor Technology vs. Micron Technology | Amkor Technology vs. MagnaChip Semiconductor |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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