Correlation Between Cisco Systems and HOT MAMAS

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Can any of the company-specific risk be diversified away by investing in both Cisco Systems and HOT MAMAS 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 HOT MAMAS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and HOT MAMAS FOODS, you can compare the effects of market volatilities on Cisco Systems and HOT MAMAS 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 HOT MAMAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and HOT MAMAS.

Diversification Opportunities for Cisco Systems and HOT MAMAS

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between Cisco Systems and HOT MAMAS

If you would invest  0.00  in HOT MAMAS FOODS on May 15, 2022 and sell it today you would earn a total of  0.00  from holding HOT MAMAS FOODS or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.4%
ValuesDaily Returns

Cisco Systems  vs.  HOT MAMAS FOODS INC

 Performance (%) 
       Timeline  
Cisco Systems 
Cisco Performance
0 of 100
Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Cisco Systems is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Cisco Price Channel

HOT MAMAS FOODS 
HOT MAMAS Performance
0 of 100
Over the last 90 days HOT MAMAS FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HOT MAMAS is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Cisco Systems and HOT MAMAS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and HOT MAMAS

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

Cisco Systems

Pair trading matchups for Cisco Systems

The idea behind Cisco Systems and HOT MAMAS FOODS 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.

HOT MAMAS FOODS

Pair trading matchups for HOT MAMAS

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against HOT MAMAS as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. HOT MAMAS's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, HOT MAMAS's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to HOT MAMAS FOODS.
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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