Correlation Between Alibaba Group and Adobe Systems
Can any of the company-specific risk be diversified away by investing in both Alibaba Group 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 Alibaba Group and Adobe Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Group Holding and Adobe Systems Incorporated, you can compare the effects of market volatilities on Alibaba Group 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 Alibaba Group with a short position of Adobe Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Group and Adobe Systems.
Diversification Opportunities for Alibaba Group and Adobe Systems
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Alibaba and Adobe is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding 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 Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and Adobe Systems go up and down completely randomly.
Pair Corralation between Alibaba Group and Adobe Systems
Given the investment horizon of 90 days Alibaba Group Holding is expected to under-perform the Adobe Systems. But the stock apears to be less risky and, when comparing its historical volatility, Alibaba Group Holding is 1.03 times less risky than Adobe Systems. The stock trades about -0.03 of its potential returns per unit of risk. The Adobe Systems Incorporated is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 50,812 in Adobe Systems Incorporated on January 25, 2024 and sell it today you would lose (3,100) from holding Adobe Systems Incorporated or give up 6.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Group Holding vs. Adobe Systems Incorporated
Performance |
| Timeline |
| Alibaba Group Holding |
| Adobe Systems rporated |
Alibaba Group and Adobe Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Group and Adobe Systems
The main advantage of trading using opposite Alibaba Group and Adobe Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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.| Alibaba Group vs. Sea | Alibaba Group vs. Vipshop Holdings Limited | Alibaba Group vs. Amazon Inc | Alibaba Group vs. JD Inc Adr |
| Adobe Systems vs. Crowdstrike Holdings | Adobe Systems vs. Palantir TechnologiesInc | Adobe Systems vs. Zscaler | Adobe Systems vs. Palo Alto Networks |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |