Correlation Between PagSeguro Digital and Adobe

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

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

Diversification Opportunities for PagSeguro Digital and Adobe

-0.62

Correlation Coefficient

PagSeguro Digital  Adobe

Excellent diversification

The 3 months correlation between PagSeguro and Adobe is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding PagSeguro Digital and Adobe Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Inc and PagSeguro Digital 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 PagSeguro Digital are associated (or correlated) with Adobe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Inc has no effect on the direction of PagSeguro Digital i.e., PagSeguro Digital and Adobe go up and down completely randomly.

Pair Corralation between PagSeguro Digital and Adobe

Assuming the 90 days trading horizon PagSeguro Digital is expected to generate 1.18 times more return on investment than Adobe. However, PagSeguro Digital is 1.18 times more volatile than Adobe Inc. It trades about 0.11 of its potential returns per unit of risk. Adobe Inc is currently generating about -0.14 per unit of risk. If you would invest  757.00  in PagSeguro Digital on December 30, 2024 and sell it today you would earn a total of  145.00  from holding PagSeguro Digital or generate 19.15% return on investment over 90 days.

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

PagSeguro Digital  vs.  Adobe Inc

PagSeguro Digital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PagSeguro Digital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, PagSeguro Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

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. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with PagSeguro Digital and Adobe

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

The idea behind PagSeguro Digital and Adobe Inc 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.