Correlation Between Acadia Healthcare and AFFLUENT MEDICAL

Can any of the company-specific risk be diversified away by investing in both Acadia Healthcare and AFFLUENT MEDICAL 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 Acadia Healthcare and AFFLUENT MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Acadia Healthcare and AFFLUENT MEDICAL SAS, you can compare the effects of market volatilities on Acadia Healthcare and AFFLUENT MEDICAL 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 Acadia Healthcare with a short position of AFFLUENT MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Healthcare and AFFLUENT MEDICAL.

Diversification Opportunities for Acadia Healthcare and AFFLUENT MEDICAL

-0.37

Correlation Coefficient

Acadia Healthcare  AFFLUENT MEDICAL

Very good diversification

The 3 months correlation between Acadia and AFFLUENT is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and AFFLUENT MEDICAL SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFFLUENT MEDICAL SAS and Acadia Healthcare 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 Acadia Healthcare are associated (or correlated) with AFFLUENT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFFLUENT MEDICAL SAS has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and AFFLUENT MEDICAL go up and down completely randomly.

Pair Corralation between Acadia Healthcare and AFFLUENT MEDICAL

Assuming the 90 days horizon Acadia Healthcare is expected to under-perform the AFFLUENT MEDICAL. In addition to that, Acadia Healthcare is 1.13 times more volatile than AFFLUENT MEDICAL SAS. It trades about -0.13 of its total potential returns per unit of risk. AFFLUENT MEDICAL SAS is currently generating about 0.03 per unit of volatility. If you would invest  136.00  in AFFLUENT MEDICAL SAS on December 20, 2024 and sell it today you would earn a total of  3.00  from holding AFFLUENT MEDICAL SAS or generate 2.21% return on investment over 90 days.

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

Acadia Healthcare  vs.  AFFLUENT MEDICAL SAS

Acadia Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acadia Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AFFLUENT MEDICAL SAS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AFFLUENT MEDICAL SAS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AFFLUENT MEDICAL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Acadia Healthcare and AFFLUENT MEDICAL

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

The idea behind Acadia Healthcare and AFFLUENT MEDICAL SAS 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.