Correlation Between Cisco Systems and NanoString Technologies

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

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

Diversification Opportunities for Cisco Systems and NanoString Technologies

0.0

Correlation Coefficient

Cisco Systems  NanoString Technologies

Pay attention - limited upside

The 3 months correlation between Cisco and NanoString is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and NanoString Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NanoString Technologies 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 NanoString Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NanoString Technologies has no effect on the direction of Cisco Systems i.e., Cisco Systems and NanoString Technologies go up and down completely randomly.

Pair Corralation between Cisco Systems and NanoString Technologies

If you would invest  5,879  in Cisco Systems on December 29, 2024 and sell it today you would earn a total of  207.00  from holding Cisco Systems or generate 3.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cisco Systems  vs.  NanoString Technologies

Cisco Systems

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Cisco Systems is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

NanoString Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days NanoString Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NanoString Technologies is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cisco Systems and NanoString Technologies

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

The idea behind Cisco Systems and NanoString Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..