Correlation Between Cisco Systems and Unilever Indonesia
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Unilever Indonesia 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 Unilever Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Unilever Indonesia Tbk, you can compare the effects of market volatilities on Cisco Systems and Unilever Indonesia 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 Unilever Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Unilever Indonesia.
Diversification Opportunities for Cisco Systems and Unilever Indonesia
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cisco and Unilever is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Unilever Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever Indonesia Tbk 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 Unilever Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Indonesia Tbk has no effect on the direction of Cisco Systems i.e., Cisco Systems and Unilever Indonesia go up and down completely randomly.
Pair Corralation between Cisco Systems and Unilever Indonesia
Given the investment horizon of 90 days Cisco Systems is expected to generate 0.37 times more return on investment than Unilever Indonesia. However, Cisco Systems is 2.74 times less risky than Unilever Indonesia. It trades about 0.3 of its potential returns per unit of risk. Unilever Indonesia Tbk is currently generating about -0.21 per unit of risk. If you would invest 5,550 in Cisco Systems on September 2, 2024 and sell it today you would earn a total of 371.00 from holding Cisco Systems or generate 6.68% 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. Unilever Indonesia Tbk
Performance |
| Timeline |
| Cisco Systems |
| Unilever Indonesia Tbk |
Cisco Systems and Unilever Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cisco Systems and Unilever Indonesia
The main advantage of trading using opposite Cisco Systems and Unilever Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Unilever Indonesia 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 Unilever Indonesia will offset losses from the drop in Unilever Indonesia's long position.| Cisco Systems vs. Juniper Networks | Cisco Systems vs. Nokia Corp ADR | Cisco Systems vs. Motorola Solutions | Cisco Systems vs. Ciena Corp |
| Unilever Indonesia vs. European Wax Center | Unilever Indonesia vs. Edgewell Personal Care | Unilever Indonesia vs. Inter Parfums | Unilever Indonesia vs. Mannatech Incorporated |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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