Correlation Between Cisco Systems and Concert Pharmaceuticals

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

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

Diversification Opportunities for Cisco Systems and Concert Pharmaceuticals

-0.52

Correlation Coefficient

Cisco Systems  Concert Pharmaceuticals

Excellent diversification

The 3 months correlation between Cisco and Concert is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Concert Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concert Pharmaceuticals 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 Concert Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concert Pharmaceuticals has no effect on the direction of Cisco Systems i.e., Cisco Systems and Concert Pharmaceuticals go up and down completely randomly.

Pair Corralation between Cisco Systems and Concert Pharmaceuticals

If you would invest  837.00  in Concert Pharmaceuticals on February 26, 2024 and sell it today you would earn a total of  0.00  from holding Concert Pharmaceuticals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.54%
Values	Daily Returns

Cisco Systems  vs.  Concert Pharmaceuticals

Cisco Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Concert Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concert Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Concert Pharmaceuticals is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cisco Systems and Concert Pharmaceuticals

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

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