Correlation Between Cisco Systems and Aeterna Zentaris

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

By analyzing existing cross correlation between Cisco Systems and Aeterna Zentaris, you can compare the effects of market volatilities on Cisco Systems and Aeterna Zentaris 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 Aeterna Zentaris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Aeterna Zentaris.

Diversification Opportunities for Cisco Systems and Aeterna Zentaris

-0.72

Correlation Coefficient

Cisco Systems  Aeterna Zentaris

Pay attention - limited upside

The 3 months correlation between Cisco and Aeterna is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Aeterna Zentaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeterna Zentaris 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 Aeterna Zentaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeterna Zentaris has no effect on the direction of Cisco Systems i.e., Cisco Systems and Aeterna Zentaris go up and down completely randomly.

Pair Corralation between Cisco Systems and Aeterna Zentaris

If you would invest  5,023  in Cisco Systems on September 17, 2024 and sell it today you would earn a total of  804.00  from holding Cisco Systems or generate 16.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Cisco Systems  vs.  Aeterna Zentaris

Cisco Systems

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Aeterna Zentaris

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeterna Zentaris has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Aeterna Zentaris is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cisco Systems and Aeterna Zentaris

The main advantage of trading using opposite Cisco Systems and Aeterna Zentaris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Aeterna Zentaris 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 Aeterna Zentaris will offset losses from the drop in Aeterna Zentaris' long position.

The idea behind Cisco Systems and Aeterna Zentaris 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 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.