Correlation Between Adobe Systems and Alibaba Group

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

Diversification Opportunities for Adobe Systems and Alibaba Group

0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Adobe and Alibaba is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Systems and Alibaba Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alibaba Group Holding 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 Alibaba Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alibaba Group Holding has no effect on the direction of Adobe Systems i.e., Adobe Systems and Alibaba Group go up and down completely randomly.

Pair Corralation between Adobe Systems and Alibaba Group

Given the investment horizon of 90 days Adobe Systems is expected to under-perform the Alibaba Group. In addition to that, Adobe Systems is 1.74 times more volatile than Alibaba Group Holding. It trades about -0.31 of its total potential returns per unit of risk. Alibaba Group Holding is currently generating about -0.42 per unit of volatility. If you would invest  9,800  in Alibaba Group Holding on June 27, 2022 and sell it today you would lose (1,920)  from holding Alibaba Group Holding or give up 19.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Adobe Systems  vs.  Alibaba Group Holding

 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 weak performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in October 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Adobe Price Channel

Alibaba Group Holding 
Alibaba Performance
0 of 100
Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Alibaba Price Channel

Adobe Systems and Alibaba Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adobe Systems and Alibaba Group

The main advantage of trading using opposite Adobe Systems and Alibaba Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adobe Systems position performs unexpectedly, Alibaba Group 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 Alibaba Group will offset losses from the drop in Alibaba Group's long position.
Adobe Systems vs. Industrias Bachoco SA
The idea behind Adobe Systems and Alibaba Group Holding 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.
Alibaba Group vs. BUSHVELD MINERALS LTD
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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