Correlation Between Cisco Systems and ChitogenX

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

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

Diversification Opportunities for Cisco Systems and ChitogenX

-0.8

Correlation Coefficient

Cisco Systems  ChitogenX

Pay attention - limited upside

The 3 months correlation between Cisco and ChitogenX is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and ChitogenX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChitogenX 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 ChitogenX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChitogenX has no effect on the direction of Cisco Systems i.e., Cisco Systems and ChitogenX go up and down completely randomly.

Pair Corralation between Cisco Systems and ChitogenX

Given the investment horizon of 90 days Cisco Systems is expected to generate 12.33 times less return on investment than ChitogenX. But when comparing it to its historical volatility, Cisco Systems is 39.75 times less risky than ChitogenX. It trades about 0.22 of its potential returns per unit of risk. ChitogenX is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.61  in ChitogenX on May 11, 2025 and sell it today you would lose (0.50) from holding ChitogenX or give up 81.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Cisco Systems  vs.  ChitogenX

Cisco Systems

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Cisco Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

ChitogenX

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in ChitogenX are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ChitogenX reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cisco Systems and ChitogenX

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

The idea behind Cisco Systems and ChitogenX 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.