Correlation Between Adyen NV and LS 1x

Can any of the company-specific risk be diversified away by investing in both Adyen NV and LS 1x 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 Adyen NV and LS 1x into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Adyen NV and LS 1x Tesla, you can compare the effects of market volatilities on Adyen NV and LS 1x 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 Adyen NV with a short position of LS 1x. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adyen NV and LS 1x.

Diversification Opportunities for Adyen NV and LS 1x

-0.09

Correlation Coefficient

Adyen NV  LS 1x

Good diversification

The 3 months correlation between Adyen and 1TSL is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Adyen NV and LS 1x Tesla in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LS 1x Tesla and Adyen NV 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 Adyen NV are associated (or correlated) with LS 1x. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LS 1x Tesla has no effect on the direction of Adyen NV i.e., Adyen NV and LS 1x go up and down completely randomly.

Pair Corralation between Adyen NV and LS 1x

Assuming the 90 days horizon Adyen NV is expected to under-perform the LS 1x. But the pink sheet apears to be less risky and, when comparing its historical volatility, Adyen NV is 2.48 times less risky than LS 1x. The pink sheet trades about -0.03 of its potential returns per unit of risk. The LS 1x Tesla is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  620.00  in LS 1x Tesla on October 6, 2024 and sell it today you would earn a total of  321.00  from holding LS 1x Tesla or generate 51.77% return on investment over 90 days.

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

Adyen NV  vs.  LS 1x Tesla

Adyen NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adyen NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Adyen NV is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

LS 1x Tesla

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LS 1x Tesla are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, LS 1x unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adyen NV and LS 1x

The main advantage of trading using opposite Adyen NV and LS 1x positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adyen NV position performs unexpectedly, LS 1x 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 LS 1x will offset losses from the drop in LS 1x's long position.

The idea behind Adyen NV and LS 1x Tesla 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.