Correlation Between UET United and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both UET United 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 UET United and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UET United Electronic and Addus HomeCare, you can compare the effects of market volatilities on UET United 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 UET United with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of UET United and Addus HomeCare.
Diversification Opportunities for UET United and Addus HomeCare
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between UET and Addus is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding UET United Electronic and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and UET United 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 UET United Electronic 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 UET United i.e., UET United and Addus HomeCare go up and down completely randomly.
Pair Corralation between UET United and Addus HomeCare
Assuming the 90 days trading horizon UET United Electronic is expected to generate 1.9 times more return on investment than Addus HomeCare. However, UET United is 1.9 times more volatile than Addus HomeCare. It trades about 0.03 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.03 per unit of risk. If you would invest 81.00 in UET United Electronic on September 18, 2024 and sell it today you would earn a total of 12.00 from holding UET United Electronic or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UET United Electronic vs. Addus HomeCare
Performance |
| Timeline |
| UET United Electronic |
| Addus HomeCare |
UET United and Addus HomeCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UET United and Addus HomeCare
The main advantage of trading using opposite UET United and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UET United 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.| UET United vs. Cisco Systems | UET United vs. Nokia | UET United vs. Superior Plus Corp | UET United vs. SIVERS SEMICONDUCTORS AB |
| Addus HomeCare vs. Ramsay Health Care | Addus HomeCare vs. Universal Health Services | Addus HomeCare vs. Superior Plus Corp | Addus HomeCare vs. SIVERS SEMICONDUCTORS AB |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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