Correlation Between Addus HomeCare and SCANDMEDICAL SOLDK-040
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK-040 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and SCANDMEDICAL SOLDK 040, you can compare the effects of market volatilities on Addus HomeCare and SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK-040. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and SCANDMEDICAL SOLDK-040.
Diversification Opportunities for Addus HomeCare and SCANDMEDICAL SOLDK-040
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Addus and SCANDMEDICAL is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and SCANDMEDICAL SOLDK 040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANDMEDICAL SOLDK 040 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 SCANDMEDICAL SOLDK-040. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANDMEDICAL SOLDK 040 has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and SCANDMEDICAL SOLDK-040 go up and down completely randomly.
Pair Corralation between Addus HomeCare and SCANDMEDICAL SOLDK-040
Assuming the 90 days horizon Addus HomeCare is expected to generate 5.26 times less return on investment than SCANDMEDICAL SOLDK-040. But when comparing it to its historical volatility, Addus HomeCare is 1.59 times less risky than SCANDMEDICAL SOLDK-040. It trades about 0.03 of its potential returns per unit of risk. SCANDMEDICAL SOLDK 040 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 74.00 in SCANDMEDICAL SOLDK 040 on September 1, 2024 and sell it today you would earn a total of 5.00 from holding SCANDMEDICAL SOLDK 040 or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. SCANDMEDICAL SOLDK 040
Performance |
| Timeline |
| Addus HomeCare |
| SCANDMEDICAL SOLDK 040 |
Addus HomeCare and SCANDMEDICAL SOLDK-040 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and SCANDMEDICAL SOLDK-040
The main advantage of trading using opposite Addus HomeCare and SCANDMEDICAL SOLDK-040 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, SCANDMEDICAL SOLDK-040 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 SCANDMEDICAL SOLDK-040 will offset losses from the drop in SCANDMEDICAL SOLDK-040's long position.| Addus HomeCare vs. Richter Gedeon Vegyszeti | Addus HomeCare vs. Charoen Pokphand Foods | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. Origin Agritech |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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