Correlation Between ADEIA P and Blackline

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

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

Diversification Opportunities for ADEIA P and Blackline

-0.29

Correlation Coefficient

ADEIA P  Blackline

Very good diversification

The 3 months correlation between ADEIA and Blackline is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ADEIA P and Blackline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackline and ADEIA P 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 ADEIA P are associated (or correlated) with Blackline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackline has no effect on the direction of ADEIA P i.e., ADEIA P and Blackline go up and down completely randomly.

Pair Corralation between ADEIA P and Blackline

Given the investment horizon of 90 days ADEIA P is expected to generate 0.61 times more return on investment than Blackline. However, ADEIA P is 1.64 times less risky than Blackline. It trades about -0.22 of its potential returns per unit of risk. Blackline is currently generating about -0.15 per unit of risk. If you would invest  1,079  in ADEIA P on January 20, 2024 and sell it today you would lose (85.00) from holding ADEIA P or give up 7.88% of portfolio value over 90 days.

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

ADEIA P  vs.  Blackline

ADEIA P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADEIA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Blackline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackline has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Blackline is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with ADEIA P and Blackline

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

The idea behind ADEIA P and Blackline 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.