Correlation Between Adobe Systems and Aurora Mobile

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

Diversification Opportunities for Adobe Systems and Aurora Mobile

0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Adobe and Aurora is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems Incorporated and Aurora Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Mobile 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 Aurora Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Mobile has no effect on the direction of Adobe Systems i.e., Adobe Systems and Aurora Mobile go up and down completely randomly.

Pair Corralation between Adobe Systems and Aurora Mobile

Given the investment horizon of 90 days Adobe Systems Incorporated is expected to generate 0.49 times more return on investment than Aurora Mobile. However, Adobe Systems Incorporated is 2.05 times less risky than Aurora Mobile. It trades about 0.02 of its potential returns per unit of risk. Aurora Mobile is currently generating about -0.05 per unit of risk. If you would invest  44,534  in Adobe Systems Incorporated on December 29, 2023 and sell it today you would earn a total of  5,926  from holding Adobe Systems Incorporated or generate 13.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Adobe Systems Incorporated  vs.  Aurora Mobile

 Performance 
       Timeline  
Adobe Systems rporated 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 uncertain performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Aurora Mobile 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Mobile are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Aurora Mobile reported solid returns over the last few months and may actually be approaching a breakup point.

Adobe Systems and Aurora Mobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adobe Systems and Aurora Mobile

The main advantage of trading using opposite Adobe Systems and Aurora Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe Systems position performs unexpectedly, Aurora Mobile 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 Aurora Mobile will offset losses from the drop in Aurora Mobile's long position.
The idea behind Adobe Systems Incorporated and Aurora Mobile 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.

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