Correlation Between Adobe Systems and Fobi AI

Can any of the company-specific risk be diversified away by investing in both Adobe Systems and Fobi AI 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 Fobi AI 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 Fobi AI, you can compare the effects of market volatilities on Adobe Systems and Fobi AI 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 Fobi AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe Systems and Fobi AI.

Diversification Opportunities for Adobe Systems and Fobi AI

-0.39

Correlation Coefficient

Adobe Systems  Fobi AI

Very good diversification

The 3 months correlation between Adobe and Fobi is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems Incorporated and Fobi AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fobi AI 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 Fobi AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fobi AI has no effect on the direction of Adobe Systems i.e., Adobe Systems and Fobi AI go up and down completely randomly.

Pair Corralation between Adobe Systems and Fobi AI

Given the investment horizon of 90 days Adobe Systems Incorporated is expected to under-perform the Fobi AI. But the stock apears to be less risky and, when comparing its historical volatility, Adobe Systems Incorporated is 34.98 times less risky than Fobi AI. The stock trades about -0.06 of its potential returns per unit of risk. The Fobi AI is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3.30  in Fobi AI on December 27, 2024 and sell it today you would lose (1.47) from holding Fobi AI or give up 44.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Adobe Systems Incorporated  vs.  Fobi AI

Adobe Systems

Risk-Adjusted Performance

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 unsteady 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.

Fobi AI

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fobi AI are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Fobi AI reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adobe Systems and Fobi AI

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

The idea behind Adobe Systems Incorporated and Fobi AI 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.