Correlation Between ADDUS HOMECARE and Gruppo Mutuionline

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

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

Diversification Opportunities for ADDUS HOMECARE and Gruppo Mutuionline

0.48

Correlation Coefficient

ADDUS HOMECARE  Gruppo Mutuionline

Very weak diversification

The 3 months correlation between ADDUS and Gruppo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and Gruppo Mutuionline SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gruppo Mutuionline SpA 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 Gruppo Mutuionline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gruppo Mutuionline SpA has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and Gruppo Mutuionline go up and down completely randomly.

Pair Corralation between ADDUS HOMECARE and Gruppo Mutuionline

Assuming the 90 days trading horizon ADDUS HOMECARE is expected to under-perform the Gruppo Mutuionline. In addition to that, ADDUS HOMECARE is 1.67 times more volatile than Gruppo Mutuionline SpA. It trades about -0.19 of its total potential returns per unit of risk. Gruppo Mutuionline SpA is currently generating about -0.02 per unit of volatility. If you would invest  3,610  in Gruppo Mutuionline SpA on December 21, 2024 and sell it today you would lose (130.00) from holding Gruppo Mutuionline SpA or give up 3.6% of portfolio value over 90 days.

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

ADDUS HOMECARE  vs.  Gruppo Mutuionline SpA

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.

Gruppo Mutuionline SpA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gruppo Mutuionline SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Gruppo Mutuionline is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ADDUS HOMECARE and Gruppo Mutuionline

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

The idea behind ADDUS HOMECARE and Gruppo Mutuionline SpA 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.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.