Correlation Between Altisource Asset and Cisco Systems

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

By analyzing existing cross correlation between Altisource Asset Management and Cisco Systems, you can compare the effects of market volatilities on Altisource Asset and Cisco Systems 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 Altisource Asset with a short position of Cisco Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altisource Asset and Cisco Systems.

Diversification Opportunities for Altisource Asset and Cisco Systems

0.4

Correlation Coefficient

Altisource Asset  Cisco Systems

Very weak diversification

The 3 months correlation between Altisource and Cisco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Altisource Asset Management and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and Altisource Asset 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 Altisource Asset Management are associated (or correlated) with Cisco Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisco Systems has no effect on the direction of Altisource Asset i.e., Altisource Asset and Cisco Systems go up and down completely randomly.

Pair Corralation between Altisource Asset and Cisco Systems

Assuming the 90 days horizon Altisource Asset is expected to generate 2.44 times less return on investment than Cisco Systems. But when comparing it to its historical volatility, Altisource Asset Management is 2.37 times less risky than Cisco Systems. It trades about 0.15 of its potential returns per unit of risk. Cisco Systems is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6,739  in Cisco Systems on September 1, 2025 and sell it today you would earn a total of  955.00  from holding Cisco Systems or generate 14.17% return on investment over 90 days.

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

Altisource Asset Management  vs.  Cisco Systems

Altisource Asset Man

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Altisource Asset Management are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Altisource Asset is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cisco Systems

Risk-Adjusted Performance

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 fragile fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altisource Asset and Cisco Systems

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

The idea behind Altisource Asset Management and Cisco Systems 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.