Correlation Between FIH Mobile and Cisco Systems
Can any of the company-specific risk be diversified away by investing in both FIH Mobile and Cisco Systems 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 FIH Mobile and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FIH Mobile Limited and Cisco Systems, you can compare the effects of market volatilities on FIH Mobile and Cisco Systems 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 FIH Mobile with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIH Mobile and Cisco Systems.
Diversification Opportunities for FIH Mobile and Cisco Systems
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FIH and Cisco is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding FIH Mobile Limited and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and FIH Mobile 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 FIH Mobile Limited are associated (or correlated) with Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of FIH Mobile i.e., FIH Mobile and Cisco Systems go up and down completely randomly.
Pair Corralation between FIH Mobile and Cisco Systems
Assuming the 90 days horizon FIH Mobile Limited is expected to generate 5.14 times more return on investment than Cisco Systems. However, FIH Mobile is 5.14 times more volatile than Cisco Systems. It trades about 0.1 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.3 per unit of risk. If you would invest 7.35 in FIH Mobile Limited on September 12, 2024 and sell it today you would earn a total of 2.65 from holding FIH Mobile Limited or generate 36.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
FIH Mobile Limited vs. Cisco Systems
Performance |
| Timeline |
| FIH Mobile Limited |
| Cisco Systems |
FIH Mobile and Cisco Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FIH Mobile and Cisco Systems
The main advantage of trading using opposite FIH Mobile and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIH Mobile position performs unexpectedly, Cisco Systems 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 Cisco Systems will offset losses from the drop in Cisco Systems' long position.| FIH Mobile vs. GOODYEAR T RUBBER | FIH Mobile vs. Sumitomo Rubber Industries | FIH Mobile vs. Elmos Semiconductor SE | FIH Mobile vs. Magnachip Semiconductor |
| Cisco Systems vs. BW OFFSHORE LTD | Cisco Systems vs. China Communications Services | Cisco Systems vs. SK TELECOM TDADR | Cisco Systems vs. SOLSTAD OFFSHORE NK |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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