Correlation Between Addus HomeCare and Highway Holdings
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and Highway Holdings 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 Highway Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and Highway Holdings Limited, you can compare the effects of market volatilities on Addus HomeCare and Highway Holdings 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 Highway Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Highway Holdings.
Diversification Opportunities for Addus HomeCare and Highway Holdings
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Addus and Highway is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Highway Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highway Holdings 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 Highway Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highway Holdings has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Highway Holdings go up and down completely randomly.
Pair Corralation between Addus HomeCare and Highway Holdings
Given the investment horizon of 90 days Addus HomeCare is expected to generate 1.05 times more return on investment than Highway Holdings. However, Addus HomeCare is 1.05 times more volatile than Highway Holdings Limited. It trades about -0.07 of its potential returns per unit of risk. Highway Holdings Limited is currently generating about -0.15 per unit of risk. If you would invest 12,910 in Addus HomeCare on August 25, 2024 and sell it today you would lose (478.00) from holding Addus HomeCare or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Addus HomeCare vs. Highway Holdings Limited
Performance |
| Timeline |
| Addus HomeCare |
| Highway Holdings |
Addus HomeCare and Highway Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addus HomeCare and Highway Holdings
The main advantage of trading using opposite Addus HomeCare and Highway Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, Highway Holdings 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 Highway Holdings will offset losses from the drop in Highway Holdings' long position.The idea behind Addus HomeCare and Highway Holdings Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Highway Holdings vs. CompoSecure | Highway Holdings vs. Dave Warrants | Highway Holdings vs. Evolv Technologies Holdings | Highway Holdings vs. Aquagold International |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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