Correlation Between ADM Endeavors and Performant Financial

Can any of the company-specific risk be diversified away by investing in both ADM Endeavors and Performant Financial 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 ADM Endeavors and Performant Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADM Endeavors and Performant Financial, you can compare the effects of market volatilities on ADM Endeavors and Performant Financial 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 ADM Endeavors with a short position of Performant Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADM Endeavors and Performant Financial.

Diversification Opportunities for ADM Endeavors and Performant Financial

0.19

Correlation Coefficient

ADM Endeavors  Performant Financial

Average diversification

The 3 months correlation between ADM and Performant is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ADM Endeavors and Performant Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performant Financial and ADM Endeavors 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 ADM Endeavors are associated (or correlated) with Performant Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performant Financial has no effect on the direction of ADM Endeavors i.e., ADM Endeavors and Performant Financial go up and down completely randomly.

Pair Corralation between ADM Endeavors and Performant Financial

Given the investment horizon of 90 days ADM Endeavors is expected to generate 2.48 times more return on investment than Performant Financial. However, ADM Endeavors is 2.48 times more volatile than Performant Financial. It trades about 0.0 of its potential returns per unit of risk. Performant Financial is currently generating about -0.04 per unit of risk. If you would invest  5.43  in ADM Endeavors on September 12, 2024 and sell it today you would lose (1.02) from holding ADM Endeavors or give up 18.78% of portfolio value over 90 days.

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

ADM Endeavors  vs.  Performant Financial

ADM Endeavors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADM Endeavors has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable primary indicators, ADM Endeavors is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performant Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ADM Endeavors and Performant Financial

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

The idea behind ADM Endeavors and Performant Financial 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.