Correlation Between Cisco Systems and Augusta Gold

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

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

Diversification Opportunities for Cisco Systems and Augusta Gold

0.72

Correlation Coefficient

Cisco Systems  Augusta Gold

Poor diversification

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

Pair Corralation between Cisco Systems and Augusta Gold

Given the investment horizon of 90 days Cisco Systems is expected to generate 1.34 times less return on investment than Augusta Gold. But when comparing it to its historical volatility, Cisco Systems is 4.34 times less risky than Augusta Gold. It trades about 0.06 of its potential returns per unit of risk. Augusta Gold Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  112.00  in Augusta Gold Corp on October 11, 2024 and sell it today you would lose (22.00) from holding Augusta Gold Corp or give up 19.64% of portfolio value over 90 days.

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

Cisco Systems  vs.  Augusta Gold Corp

Cisco Systems

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Cisco Systems may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Augusta Gold Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Augusta Gold Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Augusta Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cisco Systems and Augusta Gold

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

The idea behind Cisco Systems and Augusta Gold Corp 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.

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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.