Correlation Between CPU SOFTWAREHOUSE and Cisco Systems

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

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

Diversification Opportunities for CPU SOFTWAREHOUSE and Cisco Systems

0.36

Correlation Coefficient

CPU SOFTWAREHOUSE  Cisco Systems

Weak diversification

The 3 months correlation between CPU and Cisco is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding CPU SOFTWAREHOUSE and Cisco Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisco Systems and CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE i.e., CPU SOFTWAREHOUSE and Cisco Systems go up and down completely randomly.

Pair Corralation between CPU SOFTWAREHOUSE and Cisco Systems

Assuming the 90 days trading horizon CPU SOFTWAREHOUSE is expected to under-perform the Cisco Systems. In addition to that, CPU SOFTWAREHOUSE is 3.23 times more volatile than Cisco Systems. It trades about -0.03 of its total potential returns per unit of risk. Cisco Systems is currently generating about 0.19 per unit of volatility. If you would invest  5,627  in Cisco Systems on September 14, 2025 and sell it today you would earn a total of  1,037  from holding Cisco Systems or generate 18.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

CPU SOFTWAREHOUSE  vs.  Cisco Systems

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

Weakest

Over the last 90 days CPU SOFTWAREHOUSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Cisco Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cisco Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPU SOFTWAREHOUSE and Cisco Systems

The main advantage of trading using opposite CPU SOFTWAREHOUSE and Cisco Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.