Correlation Between Cisco Systems and GCT Semiconductor
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and GCT Semiconductor 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 GCT Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and GCT Semiconductor Holding, you can compare the effects of market volatilities on Cisco Systems and GCT Semiconductor 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 GCT Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and GCT Semiconductor.
Diversification Opportunities for Cisco Systems and GCT Semiconductor
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and GCT is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and GCT Semiconductor Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCT Semiconductor Holding 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 GCT Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCT Semiconductor Holding has no effect on the direction of Cisco Systems i.e., Cisco Systems and GCT Semiconductor go up and down completely randomly.
Pair Corralation between Cisco Systems and GCT Semiconductor
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.21 times more return on investment than GCT Semiconductor. However, Cisco Systems is 4.87 times less risky than GCT Semiconductor. It trades about 0.26 of its potential returns per unit of risk. GCT Semiconductor Holding is currently generating about -0.03 per unit of risk. If you would invest 5,568 in Cisco Systems on August 30, 2024 and sell it today you would earn a total of 361.00 from holding Cisco Systems or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cisco Systems vs. GCT Semiconductor Holding
Performance |
| Timeline |
| Cisco Systems |
| GCT Semiconductor Holding |
Cisco Systems and GCT Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and GCT Semiconductor
The main advantage of trading using opposite Cisco Systems and GCT Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, GCT Semiconductor 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 GCT Semiconductor will offset losses from the drop in GCT Semiconductor's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| GCT Semiconductor vs. First Solar | GCT Semiconductor vs. Sunrun Inc | GCT Semiconductor vs. Canadian Solar | GCT Semiconductor vs. SolarEdge Technologies |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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