Correlation Between Cisco Systems and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Highway 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 Highway 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 Highway Holdings Limited, you can compare the effects of market volatilities on Cisco Systems and Highway 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 Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Highway Holdings.
Diversification Opportunities for Cisco Systems and Highway Holdings
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cisco and Highway is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway 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 Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of Cisco Systems i.e., Cisco Systems and Highway Holdings go up and down completely randomly.
Pair Corralation between Cisco Systems and Highway Holdings
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.38 times more return on investment than Highway Holdings. However, Cisco Systems is 2.62 times less risky than Highway Holdings. It trades about 0.14 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about 0.01 per unit of risk. If you would invest 4,636 in Cisco Systems on September 3, 2024 and sell it today you would earn a total of 1,285 from holding Cisco Systems or generate 27.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.32% |
| Values | Daily Returns |
Cisco Systems vs. Highway Holdings Limited
Performance |
| Timeline |
| Cisco Systems |
| Highway Holdings |
Cisco Systems and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Highway Holdings
The main advantage of trading using opposite Cisco Systems and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Highway 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 Highway Holdings will offset losses from the drop in Highway Holdings' long position.| Cisco Systems vs. Highway Holdings Limited | Cisco Systems vs. QCR Holdings | Cisco Systems vs. Partner Communications | Cisco Systems vs. Acumen Pharmaceuticals |
| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |