Correlation Between Addus HomeCare and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and DAIRY FARM 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 DAIRY FARM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and DAIRY FARM INTL, you can compare the effects of market volatilities on Addus HomeCare and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and DAIRY FARM.
Diversification Opportunities for Addus HomeCare and DAIRY FARM
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and DAIRY is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and DAIRY FARM go up and down completely randomly.
Pair Corralation between Addus HomeCare and DAIRY FARM
Assuming the 90 days horizon Addus HomeCare is expected to generate 2.17 times more return on investment than DAIRY FARM. However, Addus HomeCare is 2.17 times more volatile than DAIRY FARM INTL. It trades about 0.03 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.13 per unit of risk. If you would invest 12,200 in Addus HomeCare on October 28, 2024 and sell it today you would earn a total of 100.00 from holding Addus HomeCare or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. DAIRY FARM INTL
Performance |
| Timeline |
| Addus HomeCare |
| DAIRY FARM INTL |
Addus HomeCare and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and DAIRY FARM
The main advantage of trading using opposite Addus HomeCare and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, DAIRY FARM 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 DAIRY FARM will offset losses from the drop in DAIRY FARM's long position.| Addus HomeCare vs. Fresenius Medical Care | Addus HomeCare vs. Chemed | 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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