Correlation Between Adobe and DONGJIANG ENVIRONMENTAL

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

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

Diversification Opportunities for Adobe and DONGJIANG ENVIRONMENTAL

-0.36

Correlation Coefficient

Adobe  DONGJIANG ENVIRONMENTAL

Very good diversification

The 3 months correlation between Adobe and DONGJIANG is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Adobe Inc and DONGJIANG ENVIRONMENTAL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGJIANG ENVIRONMENTAL and Adobe 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 Inc are associated (or correlated) with DONGJIANG ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGJIANG ENVIRONMENTAL has no effect on the direction of Adobe i.e., Adobe and DONGJIANG ENVIRONMENTAL go up and down completely randomly.

Pair Corralation between Adobe and DONGJIANG ENVIRONMENTAL

Assuming the 90 days trading horizon Adobe Inc is expected to under-perform the DONGJIANG ENVIRONMENTAL. But the stock apears to be less risky and, when comparing its historical volatility, Adobe Inc is 3.85 times less risky than DONGJIANG ENVIRONMENTAL. The stock trades about -0.12 of its potential returns per unit of risk. The DONGJIANG ENVIRONMENTAL H is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  22.00  in DONGJIANG ENVIRONMENTAL H on December 21, 2024 and sell it today you would lose (1.00) from holding DONGJIANG ENVIRONMENTAL H or give up 4.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Adobe Inc  vs.  DONGJIANG ENVIRONMENTAL H

Adobe Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Adobe Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental drivers remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

DONGJIANG ENVIRONMENTAL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DONGJIANG ENVIRONMENTAL H are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DONGJIANG ENVIRONMENTAL reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adobe and DONGJIANG ENVIRONMENTAL

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

The idea behind Adobe Inc and DONGJIANG ENVIRONMENTAL H 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.