Correlation Between Addus HomeCare and PROSIEBENSAT1 MEDIADR4/

Can any of the company-specific risk be diversified away by investing in both Addus HomeCare and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Addus HomeCare and PROSIEBENSAT1 MEDIADR4, you can compare the effects of market volatilities on Addus HomeCare and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and PROSIEBENSAT1 MEDIADR4/.

Diversification Opportunities for Addus HomeCare and PROSIEBENSAT1 MEDIADR4/

0.26

Correlation Coefficient

Addus HomeCare  PROSIEBENSAT1 MEDIADR4/

Modest diversification

The 3 months correlation between Addus and PROSIEBENSAT1 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and PROSIEBENSAT1 MEDIADR4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROSIEBENSAT1 MEDIADR4/ has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and PROSIEBENSAT1 MEDIADR4/ go up and down completely randomly.

Pair Corralation between Addus HomeCare and PROSIEBENSAT1 MEDIADR4/

Assuming the 90 days horizon Addus HomeCare is expected to generate 1.18 times less return on investment than PROSIEBENSAT1 MEDIADR4/. But when comparing it to its historical volatility, Addus HomeCare is 1.84 times less risky than PROSIEBENSAT1 MEDIADR4/. It trades about 0.2 of its potential returns per unit of risk. PROSIEBENSAT1 MEDIADR4 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  115.00  in PROSIEBENSAT1 MEDIADR4 on September 23, 2024 and sell it today you would earn a total of  10.00  from holding PROSIEBENSAT1 MEDIADR4 or generate 8.7% return on investment over 90 days.

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

Addus HomeCare  vs.  PROSIEBENSAT1 MEDIADR4

Addus HomeCare

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Addus HomeCare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Addus HomeCare may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PROSIEBENSAT1 MEDIADR4/

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROSIEBENSAT1 MEDIADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/

The main advantage of trading using opposite Addus HomeCare and PROSIEBENSAT1 MEDIADR4/ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addus HomeCare position performs unexpectedly, PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4/ will offset losses from the drop in PROSIEBENSAT1 MEDIADR4/'s long position.

The idea behind Addus HomeCare and PROSIEBENSAT1 MEDIADR4 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.