Correlation Between Addus HomeCare and Concord Medical
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Concord Medical 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 Concord Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Concord Medical Services, you can compare the effects of market volatilities on Addus HomeCare and Concord Medical 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 Concord Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Concord Medical.
Diversification Opportunities for Addus HomeCare and Concord Medical
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Addus and Concord is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Concord Medical Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concord Medical Services 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 Concord Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concord Medical Services has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Concord Medical go up and down completely randomly.
Pair Corralation between Addus HomeCare and Concord Medical
Given the investment horizon of 90 days Addus HomeCare is expected to generate 0.3 times more return on investment than Concord Medical. However, Addus HomeCare is 3.38 times less risky than Concord Medical. It trades about -0.13 of its potential returns per unit of risk. Concord Medical Services is currently generating about -0.21 per unit of risk. If you would invest 12,978 in Addus HomeCare on August 30, 2024 and sell it today you would lose (849.00) from holding Addus HomeCare or give up 6.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addus HomeCare vs. Concord Medical Services
Performance |
| Timeline |
| Addus HomeCare |
| Concord Medical Services |
Addus HomeCare and Concord Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Concord Medical
The main advantage of trading using opposite Addus HomeCare and Concord Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Concord Medical 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 Concord Medical will offset losses from the drop in Concord Medical's long position.| Addus HomeCare vs. Encompass Health Corp | Addus HomeCare vs. Pennant Group | Addus HomeCare vs. Acadia Healthcare | Addus HomeCare vs. Select Medical Holdings |
| Concord Medical vs. Pennant Group | Concord Medical vs. Encompass Health Corp | Concord Medical vs. Enhabit | Concord Medical vs. National HealthCare |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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