Correlation Between Addus HomeCare and USWE SPORTS

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

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

Diversification Opportunities for Addus HomeCare and USWE SPORTS

0.11

Correlation Coefficient

Addus HomeCare  USWE SPORTS

Average diversification

The 3 months correlation between Addus and USWE is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB 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 USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and USWE SPORTS go up and down completely randomly.

Pair Corralation between Addus HomeCare and USWE SPORTS

Assuming the 90 days horizon Addus HomeCare is expected to under-perform the USWE SPORTS. In addition to that, Addus HomeCare is 1.01 times more volatile than USWE SPORTS AB. It trades about -0.21 of its total potential returns per unit of risk. USWE SPORTS AB is currently generating about 0.02 per unit of volatility. If you would invest  74.00  in USWE SPORTS AB on December 28, 2024 and sell it today you would earn a total of  1.00  from holding USWE SPORTS AB or generate 1.35% 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.  USWE SPORTS AB

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. Despite fragile 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.

USWE SPORTS AB

Risk-Adjusted Performance

Weak

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

Pair Trading with Addus HomeCare and USWE SPORTS

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

The idea behind Addus HomeCare and USWE SPORTS AB 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.