Correlation Between Chongqing Machinery and ADDUS HOMECARE
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery 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 Chongqing Machinery and ADDUS HOMECARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and ADDUS HOMECARE, you can compare the effects of market volatilities on Chongqing Machinery 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 Chongqing Machinery with a short position of ADDUS HOMECARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and ADDUS HOMECARE.
Diversification Opportunities for Chongqing Machinery and ADDUS HOMECARE
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chongqing and ADDUS is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and ADDUS HOMECARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDUS HOMECARE and Chongqing Machinery 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 Chongqing Machinery Electric 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 Chongqing Machinery i.e., Chongqing Machinery and ADDUS HOMECARE go up and down completely randomly.
Pair Corralation between Chongqing Machinery and ADDUS HOMECARE
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 5.45 times more return on investment than ADDUS HOMECARE. However, Chongqing Machinery is 5.45 times more volatile than ADDUS HOMECARE. It trades about 0.08 of its potential returns per unit of risk. ADDUS HOMECARE is currently generating about 0.13 per unit of risk. If you would invest 7.85 in Chongqing Machinery Electric on October 19, 2024 and sell it today you would earn a total of 0.55 from holding Chongqing Machinery Electric or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. ADDUS HOMECARE
Performance |
| Timeline |
| Chongqing Machinery |
| ADDUS HOMECARE |
Chongqing Machinery and ADDUS HOMECARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and ADDUS HOMECARE
The main advantage of trading using opposite Chongqing Machinery and ADDUS HOMECARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery 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.| Chongqing Machinery vs. CVR Medical Corp | Chongqing Machinery vs. Medical Properties Trust | Chongqing Machinery vs. Fortescue Metals Group | Chongqing Machinery vs. Aluminum of |
| 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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