Correlation Between Cisco Systems and RSTN Old

Can any of the company-specific risk be diversified away by investing in both Cisco Systems and RSTN 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 RSTN 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 RSTN Old, you can compare the effects of market volatilities on Cisco Systems and RSTN 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 RSTN Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and RSTN Old.

Diversification Opportunities for Cisco Systems and RSTN Old

0.21

Correlation Coefficient

Cisco Systems  RSTN Old

Modest diversification

The 3 months correlation between Cisco and RSTN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and RSTN Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RSTN 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 RSTN Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RSTN Old has no effect on the direction of Cisco Systems i.e., Cisco Systems and RSTN Old go up and down completely randomly.

Pair Corralation between Cisco Systems and RSTN Old

If you would invest  5,858  in Cisco Systems on October 24, 2024 and sell it today you would earn a total of  165.00  from holding Cisco Systems or generate 2.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	5.56%
Values	Daily Returns

Cisco Systems  vs.  RSTN Old

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.

RSTN Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RSTN Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cisco Systems and RSTN Old

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

The idea behind Cisco Systems and RSTN 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.