Correlation Between Zenvia and Adobe Systems

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

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

Diversification Opportunities for Zenvia and Adobe Systems

-0.68

Correlation Coefficient

Zenvia  Adobe Systems

Excellent diversification

The 3 months correlation between Zenvia and Adobe is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Zenvia Inc and Adobe Systems Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Systems rporated and Zenvia 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 Zenvia Inc are associated (or correlated) with Adobe Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adobe Systems rporated has no effect on the direction of Zenvia i.e., Zenvia and Adobe Systems go up and down completely randomly.

Pair Corralation between Zenvia and Adobe Systems

Given the investment horizon of 90 days Zenvia Inc is expected to generate 6.09 times more return on investment than Adobe Systems. However, Zenvia is 6.09 times more volatile than Adobe Systems Incorporated. It trades about 0.04 of its potential returns per unit of risk. Adobe Systems Incorporated is currently generating about -0.44 per unit of risk. If you would invest  215.00  in Zenvia Inc on January 24, 2024 and sell it today you would earn a total of  2.00  from holding Zenvia Inc or generate 0.93% return on investment over 90 days.

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

Zenvia Inc  vs.  Adobe Systems Incorporated

Zenvia Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Zenvia Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Zenvia showed solid returns over the last few months and may actually be approaching a breakup point.

Adobe Systems rporated

Risk-Adjusted Performance

0 of 100

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

Pair Trading with Zenvia and Adobe Systems

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

The idea behind Zenvia Inc and Adobe Systems Incorporated 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.