Correlation Between Adobe Systems and MicroAlgo

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

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

Diversification Opportunities for Adobe Systems and MicroAlgo

0.59

Correlation Coefficient

Adobe Systems  MicroAlgo

Very weak diversification

The 3 months correlation between Adobe and MicroAlgo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems Incorporated and MicroAlgo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroAlgo and Adobe 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 Adobe Systems Incorporated are associated (or correlated) with MicroAlgo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroAlgo has no effect on the direction of Adobe Systems i.e., Adobe Systems and MicroAlgo go up and down completely randomly.

Pair Corralation between Adobe Systems and MicroAlgo

Given the investment horizon of 90 days Adobe Systems Incorporated is expected to generate 0.39 times more return on investment than MicroAlgo. However, Adobe Systems Incorporated is 2.57 times less risky than MicroAlgo. It trades about 0.04 of its potential returns per unit of risk. MicroAlgo is currently generating about -0.43 per unit of risk. If you would invest  49,771  in Adobe Systems Incorporated on August 20, 2024 and sell it today you would earn a total of  566.00  from holding Adobe Systems Incorporated or generate 1.14% return on investment over 90 days.

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

Adobe Systems Incorporated  vs.  MicroAlgo

Adobe Systems

Risk-Adjusted Performance

0 of 100

Very Weak

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

MicroAlgo

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MicroAlgo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Adobe Systems and MicroAlgo

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

The idea behind Adobe Systems Incorporated and MicroAlgo 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.