Correlation Between Cisco Systems and Secoo Holding
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Secoo Holding 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 Secoo Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Secoo Holding, you can compare the effects of market volatilities on Cisco Systems and Secoo Holding 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 Secoo Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Secoo Holding.
Diversification Opportunities for Cisco Systems and Secoo Holding
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cisco and Secoo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Secoo Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secoo 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 Secoo Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secoo Holding has no effect on the direction of Cisco Systems i.e., Cisco Systems and Secoo Holding go up and down completely randomly.
Pair Corralation between Cisco Systems and Secoo Holding
Given the investment horizon of 90 days Cisco Systems is expected to generate 32.87 times less return on investment than Secoo Holding. But when comparing it to its historical volatility, Cisco Systems is 15.43 times less risky than Secoo Holding. It trades about 0.04 of its potential returns per unit of risk. Secoo Holding is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 61.00 in Secoo Holding on August 24, 2024 and sell it today you would earn a total of 22.00 from holding Secoo Holding or generate 36.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 18.8% |
| Values | Daily Returns |
Cisco Systems vs. Secoo Holding
Performance |
| Timeline |
| Cisco Systems |
| Secoo Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cisco Systems and Secoo Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Secoo Holding
The main advantage of trading using opposite Cisco Systems and Secoo Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Secoo Holding 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 Secoo Holding will offset losses from the drop in Secoo Holding's 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 |
| Secoo Holding vs. Kidpik Corp | Secoo Holding vs. Qurate Retail Series | Secoo Holding vs. Natural Health Trend | Secoo Holding vs. Liquidity Services |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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