Correlation Between Addus HomeCare and PT Bank
Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and PT Bank 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 PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addus HomeCare and PT Bank Rakyat, you can compare the effects of market volatilities on Addus HomeCare and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and PT Bank.
Diversification Opportunities for Addus HomeCare and PT Bank
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Addus and BYRA is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat 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 PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and PT Bank go up and down completely randomly.
Pair Corralation between Addus HomeCare and PT Bank
Assuming the 90 days horizon Addus HomeCare is expected to generate 0.61 times more return on investment than PT Bank. However, Addus HomeCare is 1.63 times less risky than PT Bank. It trades about -0.06 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.12 per unit of risk. If you would invest 11,800 in Addus HomeCare on September 9, 2024 and sell it today you would lose (300.00) from holding Addus HomeCare or give up 2.54% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Addus HomeCare vs. PT Bank Rakyat
Performance |
Timeline |
Addus HomeCare |
PT Bank Rakyat |
Addus HomeCare and PT Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Addus HomeCare and PT Bank
The main advantage of trading using opposite Addus HomeCare and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, PT Bank 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 PT Bank will offset losses from the drop in PT Bank's long position.Addus HomeCare vs. Data3 Limited | Addus HomeCare vs. Automatic Data Processing | Addus HomeCare vs. BORR DRILLING NEW | Addus HomeCare vs. G III Apparel Group |
PT Bank vs. Columbia Sportswear | PT Bank vs. ANDRADA MINING LTD | PT Bank vs. AEGEAN AIRLINES | PT Bank vs. JD SPORTS FASH |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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