Correlation Between Aluminumof China and ADDUS HOMECARE
Can any of the company-specific risk be diversified away by investing in both Aluminumof China 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 Aluminumof China and ADDUS HOMECARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and ADDUS HOMECARE, you can compare the effects of market volatilities on Aluminumof China 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 Aluminumof China with a short position of ADDUS HOMECARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and ADDUS HOMECARE.
Diversification Opportunities for Aluminumof China and ADDUS HOMECARE
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aluminumof and ADDUS is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and ADDUS HOMECARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDUS HOMECARE and Aluminumof China 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 Aluminum of 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 Aluminumof China i.e., Aluminumof China and ADDUS HOMECARE go up and down completely randomly.
Pair Corralation between Aluminumof China and ADDUS HOMECARE
Assuming the 90 days horizon Aluminum of is expected to generate 2.12 times more return on investment than ADDUS HOMECARE. However, Aluminumof China is 2.12 times more volatile than ADDUS HOMECARE. It trades about 0.12 of its potential returns per unit of risk. ADDUS HOMECARE is currently generating about 0.13 per unit of risk. If you would invest 54.00 in Aluminum of on October 19, 2024 and sell it today you would earn a total of 3.00 from holding Aluminum of or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Aluminum of vs. ADDUS HOMECARE
Performance |
| Timeline |
| Aluminumof China |
| ADDUS HOMECARE |
Aluminumof China and ADDUS HOMECARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and ADDUS HOMECARE
The main advantage of trading using opposite Aluminumof China and ADDUS HOMECARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China 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.| Aluminumof China vs. United Utilities Group | Aluminumof China vs. Siemens Healthineers AG | Aluminumof China vs. CyberArk Software | Aluminumof China vs. MAGIC SOFTWARE ENTR |
| ADDUS HOMECARE vs. Transport International Holdings | ADDUS HOMECARE vs. Aluminum of | ADDUS HOMECARE vs. Yuexiu Transport Infrastructure | ADDUS HOMECARE vs. Chongqing Machinery Electric |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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