Correlation Between Cisco Systems and ClearSign Combustion

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

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

Diversification Opportunities for Cisco Systems and ClearSign Combustion

-0.58

Correlation Coefficient

Cisco Systems  ClearSign Combustion

Excellent diversification

The 3 months correlation between Cisco and ClearSign is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and ClearSign Combustion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearSign Combustion 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 ClearSign Combustion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearSign Combustion has no effect on the direction of Cisco Systems i.e., Cisco Systems and ClearSign Combustion go up and down completely randomly.

Pair Corralation between Cisco Systems and ClearSign Combustion

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.25 times more return on investment than ClearSign Combustion. However, Cisco Systems is 4.02 times less risky than ClearSign Combustion. It trades about 0.17 of its potential returns per unit of risk. ClearSign Combustion is currently generating about -0.06 per unit of risk. If you would invest  6,324  in Cisco Systems on May 16, 2025 and sell it today you would earn a total of  716.00  from holding Cisco Systems or generate 11.32% return on investment over 90 days.

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

Cisco Systems  vs.  ClearSign Combustion

Cisco Systems

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cisco Systems are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Cisco Systems may actually be approaching a critical reversion point that can send shares even higher in September 2025.

ClearSign Combustion

Risk-Adjusted Performance

Weakest

Over the last 90 days ClearSign Combustion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in September 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Cisco Systems and ClearSign Combustion

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

The idea behind Cisco Systems and ClearSign Combustion 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.