Correlation Between Cisco Systems and AudioCodes
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and AudioCodes 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 AudioCodes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and AudioCodes, you can compare the effects of market volatilities on Cisco Systems and AudioCodes 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 AudioCodes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and AudioCodes.
Diversification Opportunities for Cisco Systems and AudioCodes
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cisco and AudioCodes is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and AudioCodes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AudioCodes 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 AudioCodes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AudioCodes has no effect on the direction of Cisco Systems i.e., Cisco Systems and AudioCodes go up and down completely randomly.
Pair Corralation between Cisco Systems and AudioCodes
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.41 times more return on investment than AudioCodes. However, Cisco Systems is 2.46 times less risky than AudioCodes. It trades about 0.04 of its potential returns per unit of risk. AudioCodes is currently generating about -0.03 per unit of risk. If you would invest 4,635 in Cisco Systems on August 24, 2024 and sell it today you would earn a total of 1,188 from holding Cisco Systems or generate 25.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. AudioCodes
Performance |
| Timeline |
| Cisco Systems |
| AudioCodes |
Cisco Systems and AudioCodes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and AudioCodes
The main advantage of trading using opposite Cisco Systems and AudioCodes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, AudioCodes 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 AudioCodes will offset losses from the drop in AudioCodes' long position.| Cisco Systems vs. Eshallgo Class A | Cisco Systems vs. Amtech Systems | Cisco Systems vs. Gold Fields Ltd | Cisco Systems vs. Aegean Airlines SA |
| AudioCodes vs. Aviat Networks | AudioCodes vs. Silicom | AudioCodes vs. Akoustis Technologies | AudioCodes vs. Gilat Satellite Networks |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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