Correlation Between Cisco Systems and CompuGroup Medical
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and CompuGroup Medical 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 CompuGroup Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and CompuGroup Medical SE, you can compare the effects of market volatilities on Cisco Systems and CompuGroup Medical 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 CompuGroup Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and CompuGroup Medical.
Diversification Opportunities for Cisco Systems and CompuGroup Medical
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cisco and CompuGroup is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and CompuGroup Medical SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompuGroup Medical 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 CompuGroup Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompuGroup Medical has no effect on the direction of Cisco Systems i.e., Cisco Systems and CompuGroup Medical go up and down completely randomly.
Pair Corralation between Cisco Systems and CompuGroup Medical
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.27 times more return on investment than CompuGroup Medical. However, Cisco Systems is 3.76 times less risky than CompuGroup Medical. It trades about 0.05 of its potential returns per unit of risk. CompuGroup Medical SE is currently generating about -0.07 per unit of risk. If you would invest 4,919 in Cisco Systems on September 12, 2024 and sell it today you would earn a total of 953.00 from holding Cisco Systems or generate 19.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 55.5% |
| Values | Daily Returns |
Cisco Systems vs. CompuGroup Medical SE
Performance |
| Timeline |
| Cisco Systems |
| CompuGroup Medical |
Cisco Systems and CompuGroup Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and CompuGroup Medical
The main advantage of trading using opposite Cisco Systems and CompuGroup Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, CompuGroup Medical 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 CompuGroup Medical will offset losses from the drop in CompuGroup Medical's long position.| Cisco Systems vs. Victory Integrity Smallmid Cap | Cisco Systems vs. Hilton Worldwide Holdings | Cisco Systems vs. NVIDIA | Cisco Systems vs. JPMorgan Chase Co |
| CompuGroup Medical vs. Veeva Systems Class | CompuGroup Medical vs. GE HealthCare Technologies | CompuGroup Medical vs. M3 Inc | CompuGroup Medical vs. Solventum Corp |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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