Correlation Between Addus HomeCare and KEMPER

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Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and KEMPER 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 KEMPER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and KEMPER P DEL, you can compare the effects of market volatilities on Addus HomeCare and KEMPER 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 KEMPER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and KEMPER.

Diversification Opportunities for Addus HomeCare and KEMPER

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Addus and KEMPER is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and KEMPER P DEL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KEMPER P DEL 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 KEMPER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KEMPER P DEL has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and KEMPER go up and down completely randomly.

Pair Corralation between Addus HomeCare and KEMPER

Given the investment horizon of 90 days Addus HomeCare is expected to generate 5.56 times more return on investment than KEMPER. However, Addus HomeCare is 5.56 times more volatile than KEMPER P DEL. It trades about 0.06 of its potential returns per unit of risk. KEMPER P DEL is currently generating about 0.01 per unit of risk. If you would invest  9,600  in Addus HomeCare on September 14, 2024 and sell it today you would earn a total of  2,624  from holding Addus HomeCare or generate 27.33% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy90.76%
ValuesDaily Returns

Addus HomeCare  vs.  KEMPER P DEL

 Performance 
       Timeline  
Addus HomeCare 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Addus HomeCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
KEMPER P DEL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days KEMPER P DEL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KEMPER is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Addus HomeCare and KEMPER Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Addus HomeCare and KEMPER

The main advantage of trading using opposite Addus HomeCare and KEMPER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, KEMPER 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 KEMPER will offset losses from the drop in KEMPER's long position.
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The idea behind Addus HomeCare and KEMPER P DEL 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.
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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