Correlation Between Cisco Systems and CLPS

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

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

Diversification Opportunities for Cisco Systems and CLPS

-0.25

Correlation Coefficient

Cisco Systems  CLPS

Very good diversification

The 3 months correlation between Cisco and CLPS is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and CLPS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLPS Inc 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 CLPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLPS Inc has no effect on the direction of Cisco Systems i.e., Cisco Systems and CLPS go up and down completely randomly.

Pair Corralation between Cisco Systems and CLPS

Given the investment horizon of 90 days Cisco Systems is expected to generate 0.44 times more return on investment than CLPS. However, Cisco Systems is 2.3 times less risky than CLPS. It trades about 0.22 of its potential returns per unit of risk. CLPS Inc is currently generating about -0.04 per unit of risk. If you would invest  6,130  in Cisco Systems on May 10, 2025 and sell it today you would earn a total of  1,049  from holding Cisco Systems or generate 17.11% return on investment over 90 days.

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

Cisco Systems  vs.  CLPS Inc

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.

CLPS Inc

Risk-Adjusted Performance

Weakest

Over the last 90 days CLPS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cisco Systems and CLPS

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

The idea behind Cisco Systems and CLPS Inc 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.