Correlation Between ADDUS HOMECARE and Television Broadcasts

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

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

Diversification Opportunities for ADDUS HOMECARE and Television Broadcasts

-0.14

Correlation Coefficient

ADDUS HOMECARE  Television Broadcasts

Good diversification

The 3 months correlation between ADDUS and Television is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding ADDUS HOMECARE and Television Broadcasts Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Television Broadcasts 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 Television Broadcasts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Television Broadcasts has no effect on the direction of ADDUS HOMECARE i.e., ADDUS HOMECARE and Television Broadcasts go up and down completely randomly.

Pair Corralation between ADDUS HOMECARE and Television Broadcasts

Assuming the 90 days trading horizon ADDUS HOMECARE is expected to generate 0.81 times more return on investment than Television Broadcasts. However, ADDUS HOMECARE is 1.23 times less risky than Television Broadcasts. It trades about 0.23 of its potential returns per unit of risk. Television Broadcasts Limited is currently generating about -0.17 per unit of risk. If you would invest  11,400  in ADDUS HOMECARE on October 10, 2024 and sell it today you would earn a total of  700.00  from holding ADDUS HOMECARE or generate 6.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

ADDUS HOMECARE  vs.  Television Broadcasts Limited

ADDUS HOMECARE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADDUS HOMECARE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ADDUS HOMECARE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Television Broadcasts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Television Broadcasts Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ADDUS HOMECARE and Television Broadcasts

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

The idea behind ADDUS HOMECARE and Television Broadcasts Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.