Correlation Between Adobe and AGEDB Technology

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

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

Diversification Opportunities for Adobe and AGEDB Technology

-0.12

Correlation Coefficient

Adobe  AGEDB Technology

Good diversification

The 3 months correlation between Adobe and AGEDB is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Inc and AGEDB Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGEDB Technology and Adobe 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 Inc are associated (or correlated) with AGEDB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGEDB Technology has no effect on the direction of Adobe i.e., Adobe and AGEDB Technology go up and down completely randomly.

Pair Corralation between Adobe and AGEDB Technology

Assuming the 90 days trading horizon Adobe Inc is expected to under-perform the AGEDB Technology. But the stock apears to be less risky and, when comparing its historical volatility, Adobe Inc is 13.31 times less risky than AGEDB Technology. The stock trades about -0.1 of its potential returns per unit of risk. The AGEDB Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  15.00  in AGEDB Technology on December 22, 2024 and sell it today you would lose (7.00) from holding AGEDB Technology or give up 46.67% of portfolio value over 90 days.

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

Adobe Inc  vs.  AGEDB Technology

Adobe Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adobe Inc 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 rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

AGEDB Technology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AGEDB Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, AGEDB Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adobe and AGEDB Technology

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

The idea behind Adobe Inc and AGEDB Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.