Correlation Between Cisco Systems and Allot Communications

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Cisco Systems and Allot Communications 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 Allot Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisco Systems and Allot Communications, you can compare the effects of market volatilities on Cisco Systems and Allot Communications 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 Allot Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisco Systems and Allot Communications.

Diversification Opportunities for Cisco Systems and Allot Communications

0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cisco and Allot is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cisco Systems and Allot Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allot Communications 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 Allot Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allot Communications has no effect on the direction of Cisco Systems i.e., Cisco Systems and Allot Communications go up and down completely randomly.

Pair Corralation between Cisco Systems and Allot Communications

Given the investment horizon of 90 days Cisco Systems is expected to under-perform the Allot Communications. But the stock apears to be less risky and, when comparing its historical volatility, Cisco Systems is 1.5 times less risky than Allot Communications. The stock trades about -0.17 of its potential returns per unit of risk. The Allot Communications is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  436.00  in Allot Communications on July 7, 2022 and sell it today you would lose (20.00)  from holding Allot Communications or give up 4.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cisco Systems  vs.  Allot Communications

 Performance (%) 
       Timeline  
Cisco Systems 
Cisco Performance
0 of 100
Over the last 90 days Cisco Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Cisco Systems is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cisco Price Channel

Allot Communications 
Allot Performance
0 of 100
Over the last 90 days Allot Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in November 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Allot Price Channel

Cisco Systems and Allot Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cisco Systems and Allot Communications

The main advantage of trading using opposite Cisco Systems and Allot Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisco Systems position performs unexpectedly, Allot Communications 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 Allot Communications will offset losses from the drop in Allot Communications' long position.
Cisco Systems vs. Amazon Inc
The idea behind Cisco Systems and Allot Communications 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.
Allot Communications vs. Mtr Corp
Allot Communications vs. Central Japan Railwa
Allot Communications vs. Wabtec Corp
Allot Communications vs. Odakyu Electric Railway
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 Global Correlations module to find global opportunities by holding instruments from different markets.

Other Complementary Tools

CEO Directory
Screen CEOs from public companies around the world
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
ETF Directory
Find actively traded Exchange Traded Funds (ETF) from around the world
Go