Correlation Between Amedisys and US Physicalrapy

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

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

Diversification Opportunities for Amedisys and US Physicalrapy

-0.59

Correlation Coefficient

Amedisys  US Physicalrapy

Excellent diversification

The 3 months correlation between Amedisys and USPH is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Amedisys and US Physicalrapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Physicalrapy and Amedisys 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 Amedisys are associated (or correlated) with US Physicalrapy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Physicalrapy has no effect on the direction of Amedisys i.e., Amedisys and US Physicalrapy go up and down completely randomly.

Pair Corralation between Amedisys and US Physicalrapy

Given the investment horizon of 90 days Amedisys is expected to generate 0.91 times more return on investment than US Physicalrapy. However, Amedisys is 1.1 times less risky than US Physicalrapy. It trades about 0.4 of its potential returns per unit of risk. US Physicalrapy is currently generating about -0.06 per unit of risk. If you would invest  8,507  in Amedisys on October 23, 2024 and sell it today you would earn a total of  684.00  from holding Amedisys or generate 8.04% return on investment over 90 days.

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

Amedisys  vs.  US Physicalrapy

Amedisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Amedisys is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

US Physicalrapy

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Amedisys and US Physicalrapy

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

The idea behind Amedisys and US Physicalrapy 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.

Check out your portfolio center.

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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.