Correlation Between Addus HomeCare and Komatsu
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Komatsu 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 Komatsu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Komatsu, you can compare the effects of market volatilities on Addus HomeCare and Komatsu 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 Komatsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Komatsu.
Diversification Opportunities for Addus HomeCare and Komatsu
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and Komatsu is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Komatsu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Komatsu 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 Komatsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Komatsu has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Komatsu go up and down completely randomly.
Pair Corralation between Addus HomeCare and Komatsu
Assuming the 90 days horizon Addus HomeCare is expected to generate 1.08 times more return on investment than Komatsu. However, Addus HomeCare is 1.08 times more volatile than Komatsu. It trades about 0.08 of its potential returns per unit of risk. Komatsu is currently generating about 0.03 per unit of risk. If you would invest 7,700 in Addus HomeCare on September 15, 2024 and sell it today you would earn a total of 3,600 from holding Addus HomeCare or generate 46.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.64% |
| Values | Daily Returns |
Addus HomeCare vs. Komatsu
Performance |
| Timeline |
| Addus HomeCare |
| Komatsu |
Addus HomeCare and Komatsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Komatsu
The main advantage of trading using opposite Addus HomeCare and Komatsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Komatsu 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 Komatsu will offset losses from the drop in Komatsu's long position.| Addus HomeCare vs. Ramsay Health Care | Addus HomeCare vs. Universal Health Services | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB |
| Komatsu vs. Shenandoah Telecommunications | Komatsu vs. Addus HomeCare | Komatsu vs. Tower One Wireless | Komatsu vs. Major Drilling Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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