Correlation Between Addus HomeCare and Meyer Burger

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

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

Diversification Opportunities for Addus HomeCare and Meyer Burger

0.46

Correlation Coefficient

Addus HomeCare  Meyer Burger

Very weak diversification

The 3 months correlation between Addus and Meyer is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Meyer Burger Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meyer Burger Technology 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 Meyer Burger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meyer Burger Technology has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Meyer Burger go up and down completely randomly.

Pair Corralation between Addus HomeCare and Meyer Burger

Given the investment horizon of 90 days Addus HomeCare is expected to under-perform the Meyer Burger. But the stock apears to be less risky and, when comparing its historical volatility, Addus HomeCare is 19.49 times less risky than Meyer Burger. The stock trades about -0.04 of its potential returns per unit of risk. The Meyer Burger Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  195.00  in Meyer Burger Technology on September 15, 2024 and sell it today you would earn a total of  43.00  from holding Meyer Burger Technology or generate 22.05% return on investment over 90 days.

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

Addus HomeCare  vs.  Meyer Burger Technology

Addus HomeCare

Risk-Adjusted Performance

0 of 100

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 comparatively stable basic indicators, Addus HomeCare is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Meyer Burger Technology

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Meyer Burger Technology are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Meyer Burger reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Addus HomeCare and Meyer Burger

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

The idea behind Addus HomeCare and Meyer Burger Technology 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.