Correlation Between ADDUS HOMECARE and DBS GROUP

Can any of the company-specific risk be diversified away by investing in both ADDUS HOMECARE and DBS GROUP 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 DBS GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADDUS HOMECARE and DBS GROUP ADR4, you can compare the effects of market volatilities on ADDUS HOMECARE and DBS GROUP 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 DBS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADDUS HOMECARE and DBS GROUP.

Diversification Opportunities for ADDUS HOMECARE and DBS GROUP

-0.51

Correlation Coefficient

ADDUS HOMECARE  DBS GROUP

Excellent diversification

The 3 months correlation between ADDUS and DBS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and DBS GROUP ADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DBS GROUP ADR4 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 DBS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DBS GROUP ADR4 has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and DBS GROUP go up and down completely randomly.

Pair Corralation between ADDUS HOMECARE and DBS GROUP

Assuming the 90 days trading horizon ADDUS HOMECARE is expected to under-perform the DBS GROUP. In addition to that, ADDUS HOMECARE is 1.76 times more volatile than DBS GROUP ADR4. It trades about -0.29 of its total potential returns per unit of risk. DBS GROUP ADR4 is currently generating about 0.05 per unit of volatility. If you would invest  12,100  in DBS GROUP ADR4 on December 19, 2024 and sell it today you would earn a total of  400.00  from holding DBS GROUP ADR4 or generate 3.31% return on investment over 90 days.

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

ADDUS HOMECARE  vs.  DBS GROUP ADR4

ADDUS HOMECARE

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADDUS HOMECARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

DBS GROUP ADR4

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DBS GROUP ADR4 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, DBS GROUP is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ADDUS HOMECARE and DBS GROUP

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

The idea behind ADDUS HOMECARE and DBS GROUP ADR4 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.