Correlation Between Adobe Systems and Thai Beverage

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Can any of the company-specific risk be diversified away by investing in both Adobe Systems and Thai Beverage 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 Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adobe Systems and Thai Beverage Public, you can compare the effects of market volatilities on Adobe Systems and Thai Beverage 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 Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adobe Systems and Thai Beverage.

Diversification Opportunities for Adobe Systems and Thai Beverage

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Adobe and TBVPF is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public 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 are associated (or correlated) with Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage Public has no effect on the direction of Adobe Systems i.e., Adobe Systems and Thai Beverage go up and down completely randomly.

Pair Corralation between Adobe Systems and Thai Beverage

Given the investment horizon of 90 days Adobe Systems is expected to under-perform the Thai Beverage. But the stock apears to be less risky and, when comparing its historical volatility, Adobe Systems is 11.48 times less risky than Thai Beverage. The stock trades about -0.02 of its potential returns per unit of risk. The Thai Beverage Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  52.00  in Thai Beverage Public on August 29, 2022 and sell it today you would lose (8.00)  from holding Thai Beverage Public or give up 15.38% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Adobe Systems  vs.  Thai Beverage Public

 Performance (%) 
       Timeline  
Adobe Systems 
Adobe Performance
0 of 100
Over the last 90 days Adobe Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal 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.

Adobe Price Channel

Thai Beverage Public 
TBVPF Performance
0 of 100
Over the last 90 days Thai Beverage Public has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

TBVPF Price Channel

Adobe Systems and Thai Beverage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adobe Systems and Thai Beverage

The main advantage of trading using opposite Adobe Systems and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe Systems position performs unexpectedly, Thai Beverage 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 Thai Beverage will offset losses from the drop in Thai Beverage's long position.
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The idea behind Adobe Systems and Thai Beverage Public 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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