Correlation Between Addus HomeCare and CANON MARKETING

Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and CANON MARKETING 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 CANON MARKETING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Addus HomeCare and CANON MARKETING JP, you can compare the effects of market volatilities on Addus HomeCare and CANON MARKETING 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 CANON MARKETING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and CANON MARKETING.

Diversification Opportunities for Addus HomeCare and CANON MARKETING

0.09

Correlation Coefficient

Addus HomeCare  CANON MARKETING

Significant diversification

The 3 months correlation between Addus and CANON is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP 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 CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and CANON MARKETING go up and down completely randomly.

Pair Corralation between Addus HomeCare and CANON MARKETING

Assuming the 90 days horizon Addus HomeCare is expected to generate 2.84 times less return on investment than CANON MARKETING. In addition to that, Addus HomeCare is 1.65 times more volatile than CANON MARKETING JP. It trades about 0.02 of its total potential returns per unit of risk. CANON MARKETING JP is currently generating about 0.11 per unit of volatility. If you would invest  2,880  in CANON MARKETING JP on September 26, 2024 and sell it today you would earn a total of  240.00  from holding CANON MARKETING JP or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Addus HomeCare  vs.  CANON MARKETING JP

Addus HomeCare

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Addus HomeCare are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Addus HomeCare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CANON MARKETING JP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking indicators, CANON MARKETING may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Addus HomeCare and CANON MARKETING

The main advantage of trading using opposite Addus HomeCare and CANON MARKETING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, CANON MARKETING 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 CANON MARKETING will offset losses from the drop in CANON MARKETING's long position.

The idea behind Addus HomeCare and CANON MARKETING JP 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.