Correlation Between REGAL ASIAN and Cisco Systems

Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN 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 REGAL ASIAN and Cisco Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and Cisco Systems, you can compare the effects of market volatilities on REGAL ASIAN 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 REGAL ASIAN with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Cisco Systems.

Diversification Opportunities for REGAL ASIAN and Cisco Systems

-0.27

Correlation Coefficient

REGAL ASIAN  Cisco Systems

Very good diversification

The 3 months correlation between REGAL and Cisco is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and REGAL ASIAN 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 REGAL ASIAN INVESTMENTS 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 REGAL ASIAN i.e., REGAL ASIAN and Cisco Systems go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Cisco Systems

Assuming the 90 days trading horizon REGAL ASIAN is expected to generate 4.33 times less return on investment than Cisco Systems. In addition to that, REGAL ASIAN is 1.22 times more volatile than Cisco Systems. It trades about 0.02 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.09 per unit of volatility. If you would invest  4,285  in Cisco Systems on September 27, 2024 and sell it today you would earn a total of  1,326  from holding Cisco Systems or generate 30.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

REGAL ASIAN INVESTMENTS  vs.  Cisco Systems

REGAL ASIAN INVESTMENTS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REGAL ASIAN INVESTMENTS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Cisco Systems

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Cisco Systems reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REGAL ASIAN and Cisco Systems

The main advantage of trading using opposite REGAL ASIAN and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN 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.

The idea behind REGAL ASIAN INVESTMENTS and Cisco Systems pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.