Correlation Between Cisco Systems and JAN Old

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

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

Diversification Opportunities for Cisco Systems and JAN Old

-0.61

Correlation Coefficient

Cisco Systems  JAN Old

Excellent diversification

The 3 months correlation between Cisco and JAN is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and JAN Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JAN Old 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 JAN Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JAN Old has no effect on the direction of Cisco Systems i.e., Cisco Systems and JAN Old go up and down completely randomly.

Pair Corralation between Cisco Systems and JAN Old

Given the investment horizon of 90 days Cisco Systems is expected to generate 2.35 times less return on investment than JAN Old. But when comparing it to its historical volatility, Cisco Systems is 8.35 times less risky than JAN Old. It trades about 0.05 of its potential returns per unit of risk. JAN Old is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  155.00  in JAN Old on October 21, 2024 and sell it today you would lose (155.00) from holding JAN Old or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.79%
Values	Daily Returns

Cisco Systems  vs.  JAN Old

Cisco Systems

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 10 (%) 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.

JAN Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JAN Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, JAN Old is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cisco Systems and JAN Old

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

The idea behind Cisco Systems and JAN Old 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.