Correlation Between Cisco Systems and CLP Holdings
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and CLP Holdings 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 CLP Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and CLP Holdings, you can compare the effects of market volatilities on Cisco Systems and CLP Holdings 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 CLP Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and CLP Holdings.
Diversification Opportunities for Cisco Systems and CLP Holdings
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cisco and CLP is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and CLP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLP Holdings 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 CLP Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLP Holdings has no effect on the direction of Cisco Systems i.e., Cisco Systems and CLP Holdings go up and down completely randomly.
Pair Corralation between Cisco Systems and CLP Holdings
Given the investment horizon of 90 days Cisco Systems is expected to generate 1.01 times more return on investment than CLP Holdings. However, Cisco Systems is 1.01 times more volatile than CLP Holdings. It trades about 0.17 of its potential returns per unit of risk. CLP Holdings is currently generating about 0.04 per unit of risk. If you would invest 4,576 in Cisco Systems on August 29, 2024 and sell it today you would earn a total of 1,383 from holding Cisco Systems or generate 30.22% 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. CLP Holdings
Performance |
| Timeline |
| Cisco Systems |
| CLP Holdings |
Cisco Systems and CLP Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and CLP Holdings
The main advantage of trading using opposite Cisco Systems and CLP Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, CLP Holdings 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 CLP Holdings will offset losses from the drop in CLP Holdings' long position.| Cisco Systems vs. Ichor Holdings | Cisco Systems vs. Fabrinet | Cisco Systems vs. Hello Group | Cisco Systems vs. Ultra Clean Holdings |
| CLP Holdings vs. Hong Kong and | CLP Holdings vs. Power Assets Holdings | CLP Holdings vs. Swire Pacific | CLP Holdings vs. Sun Hung Kai |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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