Correlation Between Cisco Systems and CeoTronics

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

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

Diversification Opportunities for Cisco Systems and CeoTronics

-0.12

Correlation Coefficient

Cisco Systems  CeoTronics

Good diversification

The 3 months correlation between Cisco and CeoTronics is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and CeoTronics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CeoTronics AG 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 CeoTronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CeoTronics AG has no effect on the direction of Cisco Systems i.e., Cisco Systems and CeoTronics go up and down completely randomly.

Pair Corralation between Cisco Systems and CeoTronics

Assuming the 90 days horizon Cisco Systems is expected to generate 0.37 times more return on investment than CeoTronics. However, Cisco Systems is 2.68 times less risky than CeoTronics. It trades about 0.24 of its potential returns per unit of risk. CeoTronics AG is currently generating about -0.04 per unit of risk. If you would invest  4,786  in Cisco Systems on April 21, 2025 and sell it today you would earn a total of  1,070  from holding Cisco Systems or generate 22.36% return on investment over 90 days.

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

Cisco Systems  vs.  CeoTronics AG

Cisco Systems

Risk-Adjusted Performance

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. Despite nearly uncertain basic indicators, Cisco Systems reported solid returns over the last few months and may actually be approaching a breakup point.

CeoTronics AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days CeoTronics AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking signals remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cisco Systems and CeoTronics

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

The idea behind Cisco Systems and CeoTronics AG 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.