Correlation Between Addus HomeCare and MOVIE GAMES
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and MOVIE GAMES 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 Addus HomeCare and MOVIE GAMES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and MOVIE GAMES SA, you can compare the effects of market volatilities on Addus HomeCare and MOVIE GAMES 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 Addus HomeCare with a short position of MOVIE GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and MOVIE GAMES.
Diversification Opportunities for Addus HomeCare and MOVIE GAMES
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Addus and MOVIE is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and MOVIE GAMES SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOVIE GAMES SA and Addus HomeCare 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 Addus HomeCare are associated (or correlated) with MOVIE GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOVIE GAMES SA has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and MOVIE GAMES go up and down completely randomly.
Pair Corralation between Addus HomeCare and MOVIE GAMES
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.28 times more return on investment than MOVIE GAMES. However, Addus HomeCare is 1.28 times more volatile than MOVIE GAMES SA. It trades about -0.04 of its potential returns per unit of risk. MOVIE GAMES SA is currently generating about -0.14 per unit of risk. If you would invest 11,700 in Addus HomeCare on August 29, 2024 and sell it today you would lose (400.00) from holding Addus HomeCare or give up 3.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. MOVIE GAMES SA
Performance |
| Timeline |
| Addus HomeCare |
| MOVIE GAMES SA |
Addus HomeCare and MOVIE GAMES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and MOVIE GAMES
The main advantage of trading using opposite Addus HomeCare and MOVIE GAMES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, MOVIE GAMES 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 MOVIE GAMES will offset losses from the drop in MOVIE GAMES's long position.| Addus HomeCare vs. Ramsay Health Care | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. NMI Holdings | Addus HomeCare vs. Origin Agritech |
| MOVIE GAMES vs. Merit Medical Systems | MOVIE GAMES vs. QURATE RETAIL INC | MOVIE GAMES vs. Microbot Medical | MOVIE GAMES vs. Ross Stores |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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