Correlation Between Cisco Systems and Padtec Holding

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

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

Diversification Opportunities for Cisco Systems and Padtec Holding

0.12

Correlation Coefficient

Cisco Systems  Padtec Holding

Average diversification

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

Pair Corralation between Cisco Systems and Padtec Holding

Assuming the 90 days trading horizon Cisco Systems is expected to generate 0.57 times more return on investment than Padtec Holding. However, Cisco Systems is 1.75 times less risky than Padtec Holding. It trades about 0.19 of its potential returns per unit of risk. Padtec Holding SA is currently generating about 0.0 per unit of risk. If you would invest  6,243  in Cisco Systems on April 21, 2025 and sell it today you would earn a total of  1,365  from holding Cisco Systems or generate 21.86% return on investment over 90 days.

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

Cisco Systems  vs.  Padtec Holding SA

Cisco Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Cisco Systems sustained solid returns over the last few months and may actually be approaching a breakup point.

Padtec Holding SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Padtec Holding SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Padtec Holding is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cisco Systems and Padtec Holding

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

The idea behind Cisco Systems and Padtec Holding SA 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.