Correlation Between Uni-President China and Adobe Systems

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

Diversification Opportunities for Uni-President China and Adobe Systems

0.07
  Correlation Coefficient

Significant diversification

The 3 months correlation between Uni-President and Adobe is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Uni-President China Holdings and Adobe Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adobe Systems and Uni-President China 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 Uni-President China Holdings 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 has no effect on the direction of Uni-President China i.e., Uni-President China and Adobe Systems go up and down completely randomly.

Pair Corralation between Uni-President China and Adobe Systems

If you would invest  31,850  in Adobe Systems on August 31, 2022 and sell it today you would earn a total of  828.00  from holding Adobe Systems or generate 2.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

Uni-President China Holdings  vs.  Adobe Systems

 Performance (%) 
       Timeline  
Uni-President China 
Uni-President Performance
0 of 100
Over the last 90 days Uni-President China Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Uni-President China is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Uni-President Price Channel

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 inconsistent 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

Uni-President China and Adobe Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Uni-President China and Adobe Systems

The main advantage of trading using opposite Uni-President China and Adobe Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Uni-President China 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.
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The idea behind Uni-President China Holdings and Adobe Systems 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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