Correlation Between Medicover and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Medicover and Addus HomeCare 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 Medicover and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medicover AB and Addus HomeCare, you can compare the effects of market volatilities on Medicover and Addus HomeCare 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 Medicover with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medicover and Addus HomeCare.
Diversification Opportunities for Medicover and Addus HomeCare
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Medicover and Addus is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Medicover AB and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Medicover 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 Medicover AB are associated (or correlated) with Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of Medicover i.e., Medicover and Addus HomeCare go up and down completely randomly.
Pair Corralation between Medicover and Addus HomeCare
Assuming the 90 days trading horizon Medicover AB is expected to under-perform the Addus HomeCare. But the stock apears to be less risky and, when comparing its historical volatility, Medicover AB is 1.37 times less risky than Addus HomeCare. The stock trades about -0.01 of its potential returns per unit of risk. The Addus HomeCare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,700 in Addus HomeCare on October 13, 2024 and sell it today you would earn a total of 1,200 from holding Addus HomeCare or generate 11.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Medicover AB vs. Addus HomeCare
Performance |
| Timeline |
| Medicover AB |
| Addus HomeCare |
Medicover and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medicover and Addus HomeCare
The main advantage of trading using opposite Medicover and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medicover position performs unexpectedly, Addus HomeCare 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 Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.| Medicover vs. SCANDMEDICAL SOLDK 040 | Medicover vs. ENVVENO MEDICAL DL 00001 | Medicover vs. GALENA MINING LTD | Medicover vs. Advanced Medical Solutions |
| Addus HomeCare vs. Universal Health Services | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. NMI Holdings | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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