Correlation Between ANGLO ASIAN and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both ANGLO ASIAN 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 ANGLO ASIAN and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ANGLO ASIAN MINING and Addus HomeCare, you can compare the effects of market volatilities on ANGLO ASIAN 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 ANGLO ASIAN with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ANGLO ASIAN and Addus HomeCare.
Diversification Opportunities for ANGLO ASIAN and Addus HomeCare
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between ANGLO and Addus is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding ANGLO ASIAN MINING and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and ANGLO ASIAN 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 ANGLO ASIAN MINING 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 ANGLO ASIAN i.e., ANGLO ASIAN and Addus HomeCare go up and down completely randomly.
Pair Corralation between ANGLO ASIAN and Addus HomeCare
Assuming the 90 days trading horizon ANGLO ASIAN MINING is expected to under-perform the Addus HomeCare. In addition to that, ANGLO ASIAN is 1.07 times more volatile than Addus HomeCare. It trades about -0.03 of its total potential returns per unit of risk. Addus HomeCare is currently generating about 0.07 per unit of volatility. If you would invest 12,200 in Addus HomeCare on October 26, 2024 and sell it today you would earn a total of 300.00 from holding Addus HomeCare or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ANGLO ASIAN MINING vs. Addus HomeCare
Performance |
| Timeline |
| ANGLO ASIAN MINING |
| Addus HomeCare |
ANGLO ASIAN and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ANGLO ASIAN and Addus HomeCare
The main advantage of trading using opposite ANGLO ASIAN and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ANGLO ASIAN 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.| ANGLO ASIAN vs. Apple Inc | ANGLO ASIAN vs. Apple Inc | ANGLO ASIAN vs. Apple Inc | ANGLO ASIAN vs. Apple Inc |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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