Correlation Between Haier Smart and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Haier Smart 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 Haier Smart and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haier Smart Home and Addus HomeCare, you can compare the effects of market volatilities on Haier Smart 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 Haier Smart with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and Addus HomeCare.
Diversification Opportunities for Haier Smart and Addus HomeCare
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Haier and Addus is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Haier Smart 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 Haier Smart Home 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 Haier Smart i.e., Haier Smart and Addus HomeCare go up and down completely randomly.
Pair Corralation between Haier Smart and Addus HomeCare
Assuming the 90 days trading horizon Haier Smart Home is expected to under-perform the Addus HomeCare. But the stock apears to be less risky and, when comparing its historical volatility, Haier Smart Home is 1.9 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 0.03 of returns per unit of risk over similar time horizon. If you would invest 11,200 in Addus HomeCare on September 1, 2024 and sell it today you would earn a total of 100.00 from holding Addus HomeCare or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haier Smart Home vs. Addus HomeCare
Performance |
| Timeline |
| Haier Smart Home |
| Addus HomeCare |
Haier Smart and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and Addus HomeCare
The main advantage of trading using opposite Haier Smart and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart 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.| Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc | Haier Smart vs. Apple Inc |
| Addus HomeCare vs. Richter Gedeon Vegyszeti | Addus HomeCare vs. Charoen Pokphand Foods | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. Origin Agritech |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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