Correlation Between AOYAMA TRADING and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING 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 AOYAMA TRADING and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and Addus HomeCare, you can compare the effects of market volatilities on AOYAMA TRADING 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 AOYAMA TRADING with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and Addus HomeCare.
Diversification Opportunities for AOYAMA TRADING and Addus HomeCare
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AOYAMA and Addus is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and AOYAMA TRADING 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 AOYAMA TRADING 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 AOYAMA TRADING i.e., AOYAMA TRADING and Addus HomeCare go up and down completely randomly.
Pair Corralation between AOYAMA TRADING and Addus HomeCare
Assuming the 90 days horizon AOYAMA TRADING is expected to generate 2.76 times more return on investment than Addus HomeCare. However, AOYAMA TRADING is 2.76 times more volatile than Addus HomeCare. It trades about 0.08 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.09 per unit of risk. If you would invest 576.00 in AOYAMA TRADING on November 1, 2024 and sell it today you would earn a total of 754.00 from holding AOYAMA TRADING or generate 130.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AOYAMA TRADING vs. Addus HomeCare
Performance |
| Timeline |
| AOYAMA TRADING |
| Addus HomeCare |
AOYAMA TRADING and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AOYAMA TRADING and Addus HomeCare
The main advantage of trading using opposite AOYAMA TRADING and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING 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.| AOYAMA TRADING vs. DIVERSIFIED ROYALTY | AOYAMA TRADING vs. HK Electric Investments | AOYAMA TRADING vs. CDL INVESTMENT | AOYAMA TRADING vs. SLR Investment Corp |
| Addus HomeCare vs. United Utilities Group | Addus HomeCare vs. UNITED UTILITIES GR | Addus HomeCare vs. GLG LIFE TECH | Addus HomeCare vs. SOFI TECHNOLOGIES |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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