Correlation Between Adyen NV and Synopsys

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

By analyzing existing cross correlation between Adyen NV and Synopsys, you can compare the effects of market volatilities on Adyen NV and Synopsys 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 Synopsys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adyen NV and Synopsys.

Diversification Opportunities for Adyen NV and Synopsys

-0.35

Correlation Coefficient

Adyen NV  Synopsys

Very good diversification

The 3 months correlation between Adyen and Synopsys is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Adyen NV and Synopsys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synopsys 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 Synopsys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synopsys has no effect on the direction of Adyen NV i.e., Adyen NV and Synopsys go up and down completely randomly.

Pair Corralation between Adyen NV and Synopsys

Assuming the 90 days horizon Adyen NV is expected to generate 0.98 times more return on investment than Synopsys. However, Adyen NV is 1.02 times less risky than Synopsys. It trades about 0.14 of its potential returns per unit of risk. Synopsys is currently generating about -0.12 per unit of risk. If you would invest  1,485  in Adyen NV on December 2, 2024 and sell it today you would earn a total of  321.00  from holding Adyen NV or generate 21.62% 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.  Synopsys

Adyen NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adyen NV are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Adyen NV showed solid returns over the last few months and may actually be approaching a breakup point.

Synopsys

Risk-Adjusted Performance

Very Weak

Over the last 90 days Synopsys 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Adyen NV and Synopsys

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

The idea behind Adyen NV and Synopsys 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.